Romania running the engines to become the first country in the CEE countries, ahead of Poland, according to the GDP per capita indicator

By Constantin Radut
The analyzes, from the last two or three years, regarding the economic growth rate of the countries of Central and Eastern Europe (CEE) did not doubt that Romania will reach the top of the platoon of the former communist member states of the EU. The only stronger link was Poland, considered sufficiently restructured and economically reformed to be surpassed by Romania in terms of economic growth.
“In 2020, Romania has surpassed Slovakia in terms of GDP per capita, and in 2021 Romania has surpassed Hungary, which is a remarkable economic performance,” said Marcel Ionescu-Heroiu, a senior expert at the World Bank, in October 2021.
At the same time, during a conference organized in Sibiu (center of Romania), Ionescu-Heroiu shows that “If the trends are maintained in a time horizon of one or two years, Romania will surpass Poland”.
Recently, an analysis by Andrei Rădulescu, director of macroeconomic analysis at Banca Transilvania-BT (the strongest bank in Romania), resumed the subject. He agrees that Romania can surpass Poland in terms of GDP per capita in purchasing power parity by the middle of this decade.
The key conditions for achieving this goal are accelerating reforms, digitizing the public sector, and accelerating investment in research and development, according to the BT analysis.
To these desideratum underlined by Andrei Radulescu, we add the fact that the reforms initiated by the former Minister of Finance of Poland, Leszek Balcerowicz, including his theory on “shock therapy” of the transition did not bear fruit in all segments of the economy. Poland is currently the country with the most centralized economy in the EEC, and its energy industry has not changed in structure since the 1970s. will bring strong imbalances in the structure of the Polish economy. The European Commission urges Warsaw to rapidly restructure the energy industry – a major challenge for any of the governments that will take power in Poland in the coming years.
Poland and Romania currently represent the top two economies in Central and Eastern Europe, with nominal GDP levels in 2020 of 500 billion euros and 200 billion euros, respectively.
If we take into account the data of the International Monetary Fund (IMF) in the period 1980-1990, the level of development in Romania was higher than in Poland.
The situation changed later, with the development gap between Poland and Romania reaching record levels in the late 1990s and early 2000s.
However, Banca Transilvania points out that the development gap between Poland and Romania has adjusted significantly in the post-crisis economic cycle: thus, in 2019 (the last year of that cycle) GDP / capita at purchasing power parity as a percentage of the EU average was 75.7% in Poland and 72% in Romania, respectively.
At the same time, the analysis shows that never in the past has the contribution of the capital factor and the contribution of multifactorial productivity to the annual rate of potential GDP been as balanced as at present, both in Poland and in Romania.
Econometric analysis shows that Romania has achieved a strong convergence towards the level in Poland in terms of the potential annual GDP growth rate from 2010 to 2019. This convergence was mainly determined by developments in the size of labor factors and multifactor productivity.
According to the analysis, the annual rate of potential GDP in Romania exceeded the level in Poland in 2020, an evolution determined by the dynamics of the capital factor.
For the period 2021-2023, Banca Transilvania expects the intensification of Romania’s convergence towards the level in Poland, through a stronger evolution of the potential growth rate, supported mainly by the contribution of the capital and labor components.