There is a simplistic but very actual classification of countries in terms of attitudes towards saving and investment, as it follows: companies with debt which consume and which includes U.S. and most developed countries in the EU, and companies that save and invest – category to which belongs China and other Asian countries with a strong economic development. Unfortunately in the last decade, with emphasis on the recent years, once it entered the EU economic area, Romania is increasingly evident in the first category, so that his public and private debt now exceeds 85 billion euros with increasing tendency of growth.
The profile that Romania has now, without material resources or valuable assets to sell, will lead to the necessity to pay the duty engaged in the most part in labor taxation – which unfortunately is not showing a high productivity. Many Romanian people who have abilities and labor force are living outside the country, where in many cases they are working below their level of qualification and earn only from excessive work. Another category of people is formed by the highly educated and young people who graduate prestigious universities in the west and do not return because here they don’t have a matching job offer – therefore the country can not take advantage of this category’s motivating potential. The latter could constitute the frame of highly skilled labor force with high productivity on which debt burden can be laid.
Unfortunately, as the Romanian society appears today, in a society in which entire communities – several million people – are socially assisted, have a low education or poor or insufficient “work longing”, a very bright future cannot appear. Now, the whole tax effort for the state support lays on less Romanians, entrepreneurs or employees in private firms who thus are not only drained of power but also ended up their hope.
Sacrifices which will have to be made in order to overcome the crisis must be shared equitably among all social classes. Those who produce added value and pensioners who have contributed honestly and have low pensions and the few public employees who consciously pay their debt on increasingly smaller wages. We cannot overcome the current situation without social solidarity and motivation for a better future.
Related to real estate property value, it is still on a downward trend until the moment of exceeding the critical point of growth in nonperforming loans. Prices will stabilize at a sustainable level in line with revenues, labor productivity and saving capacity. I consider the latter being limited, at least in the medium term, due to reasons stated above.
Dr. ec. Adrian Crivii, FRICS, MAA
Real Estate Market, Uncategorized, Valuation
english
