The Economy of Romania
The Boom and 2009 Bust
Rapid credit growth and consumption fuelled a boom until 2008, followed by a deep recession and an IMF-led bailout of about €20 billion.
Overheating and a crash.
Boom
Wages and property prices soared, and households borrowed in euros and Swiss francs.
Bust
GDP fell about 7 per cent in 2009.
Bailout
The IMF, EU and others provided support in exchange for spending cuts.
Adjustment
Public wages were cut and taxes rose, causing discontent.
A pay cut
Civil servants saw their salaries reduced by a quarter.
Assuming fast growth is always sustainable
Credit-fuelled booms can end badly.
Key takeaways
- Credit fuelled a boom.
- GDP fell in 2009.
- The IMF led a bailout.
- Austerity followed.
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