Prima pagină » English » Romanian Consumers To Buy Cheaper Products, Due To Fincl Crisis – GEA

Romanian Consumers To Buy Cheaper Products, Due To Fincl Crisis – GEA

Romanian consumers will focus on cheaper products and a cut in consumption is also possible, following the recent financial turmoil, Liviu Voinea, the executive manager of the Group of Applied Economics, or GEA, said Tuesday.
Romanian Consumers To Buy Cheaper Products, Due To Fincl Crisis - GEA
25 nov. 2008, 13:31, English

"We will probably see a very strong substitution effect. Consumption is a natural thing and will not disappear, but we will probably see either a reorientation towards cheaper products or a lower consumption pace," Voinea said during the third edition of the Romania Retail Forum organized by MEDIAFAX.

Among consumer goods, premium products will suffer most from the recent financial turmoil, Voinea added.

He recommended retailers not to rely very much their 2009 business plan on the anti-crisis governmental programs based on state aid.

"I do not believe in the anti-crisis programs based on state aid because the government has no money to grant such aid," Voinea said, adding that the Finance Ministry began to resort to attracting liquidities with one-week maturity.

Voinea said the 2009 budget is based on a 6% economic growth, a target that cannot be reached.

The Romanian National Prognosis Commission has recently forecast a gross domestic product growth of 9.1% for this year and 6% for 2009. The central bank sees GDP growth at 8-9% in 2008 and at 4-5% in 2009.

According to Voinea, the growth of  household expenses was fueled by consumer loans, that hiked annually by 60%, and by the 20-25% annual salary growth. In addition, the fiscal policy stimulated consumption.

"Consumption offers a feeling of prosperity which is not always right. Debts increased four times in people’s assets over the past four years. Retail companies also reported debts three times higher than the value of their assets," Voinea also said.