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Discouraging consumption beyond a certain limit turns into its opposite: consumption from imports and stagflation

18.02.2010, 23:07 23

Specialists agree that exports will be the driver of theRomanian economy in 2010. Also, the same macroeconomic expertsagree any consumption-based increase generates deficits and henceit is not good. There is, however, a limit beyond whichdiscouraging consumption can turn exactly into its reverse:boosting consumption from imports and stagflation. This happenswhen the plunging domestic demand leads to the dissolution ofsupply chains through which domestic resources are turned intofinite products for Romanian consumers. From that moment, Romanianconsumers will make purchases only from imports and domesticproducers will collapse. The main challenge of the Romanian economyfor the following period will be to find ways to boost supplychains, namely some organised systems turning local resources intofinite products aimed at Romanian consumers, and not be obsessivelyconcerned about the consumption issue.

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