ROMANIA


The largest Balkan republic, land of vast natural resources

Total area: 237,500 sq km (slightly smaller than Oregon)
Population:  21.3 million
Government type: Unitary semi-presidential republic
Administrative division: 41 counties (called „judete“) and the municipality („municipiu“) of Bucharest
Capital + other major cities: Bucharest (1.88 million) + Cluj-Napoca (325,000), Timisoara (319,000), Iasi (290,000), Constanta (284,000), Craiova (270,000)
Currency: leu (ROL) was being phased out in 2006; "new" leu (RON) was introduced in 2005 due to currency revaluation: 10,000 ROL = 1 RON
Languages: Romanian (official) 85.4%, Hungarian 6.3%, Romany 1.2%, other 1%, undeclared 6.1%
Ethnicity: Romanian 85.4%, Hungarian 6.3%, Roma 3.1%, Ukrainian 0.3%, German 0.2%, other 0.7%, undeclared 6.1%
Religion: Eastern Orthodox 81.9%, Protestant 6.4%, Roman Catholic 4.3%, other incl. Muslim 0.9%, none or atheist 0.2%, undeclared 6.3%
President: (Mr.) Klaus Werner IOHANNIS (since 21 December 2014)
Prime Minister: (Mr.) Dacian CIOLOS (since 17 November 2015)
Date of EU accession: 1 January 2007
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KEY FEATURES

  • Fast growing low-cost manufacturing base in Southeastern Europe
  • EU’s 2nd poorest in terms of GDP per capita (PPS)
  • 32% of population employed in agriculture and primary production
  • 1st oil and gas producer in the CEE region (excl. Russia)
  • Beautiful mountains, Europe’s best preserved delta of the Danube river and the black Sea coast
  • Good language skills of Romanian business persons

MACROECONOMIC OVERVIEW

Romania is one of two newer EU members which joined in 2007 (only followed by Croatia in 2013). Although it belongs to the poorest EU countries, together with Bulgaria, it is an upper-middle income economy by global standards and has been experiencing rapid growth and development. Romania started very slowly after the fall of communism compared to other CEE countries. In 1990s the country experienced a decade of economic instability and decline due to an obsolete industrial base and a lack of structural reforms.


The country emerged in 2000 from a punishing three-year recession due to strong demand in EU export markets. Domestic consumption and investment fueled strong GDP growth, but led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty.


Corruption and red tape continue to permeate the business environment. As a result of the global financial crisis, Romania signed on to a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. GDP contracted from 2009 to 2011. Economic growth rebounded in 2013-15, driven by strong industrial exports and excellent agricultural harvests, and the fiscal deficit was reduced substantially. Industry outperformed other sectors of the economy in 2015. Exports remained an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was a second driver, due to the mid-2015 cut, from 24% to 9%, of the VAT levied upon foodstuffs.


In 2015, the government of Romania succeeded in meeting its annual target for the budget deficit, the external deficit remained low, even if it rose due to increasing imports. For the first time since 1989, inflation turned into deflation, allowing for a gradual loosening of monetary policy throughout the period.



Selected economic indicators, Romania, 2010 - 2016

    2010 2011 2012 2013 2014 2015 2016*
GDP
Real GDP growth
%
-0.8
1.1
0.6
3.5
3.0
3.8
4.2
GDP at current prices
€ bn
126.75
133.31
133.51
144.25
150.23
160.35
Foreign trade
Exports
€ bn
40.94
49.12
50.02
57.34
61.93
65.89
Imports
€ bn
48.72
56.54
56.66
58.48
62.39
66.74
Balance
€ bn
-7.78
-7.42
-6.64
-1.12
-0.46
-0.84
Prices
CPI - average inflation rate
%
6.1
5.8
3.3
4.0
1.4
-0.4
-0.6
PPI – industry - average
%
4.4
7.1
5.4
2.1
-0.1
-2.2
Employment
Registered unemployment
%
7.3
7.4
7.0
7.3
6.8
6.8
6.8
Average monthly gross wage
460
479
479
507
524
Exchange rates
RON/USD average
3.1791
3.0481
3.4695
3.3278
3.3487
4.0056
RON/EUR average*
4.2122
4.2391
4.4593
4.4190
4.4437
4.4454

*2016 data - forecast
Source: Romanian Statistical Yearbook, Romanian Institute of Statistics, IMF, Eurostat, 2016



KEY SECTORS


The key sectors of Romanian economy are agriculture, automotive, ICT, oil & gas, pharma, telecom and energy. Main FDI sectors include wood processing, optics and electronics industry, energy, trade, financial services and construction. Among service industries, Romania has exceptional strengths in IT. Some refer to Romania as the “Silicon Valley” of Eastern Europe as it boasts the highest number of IT specialists in Europe and 6th worldwide.


Agriculture

The agricultural sector has been contributing 7% to Romanian GDP and employs 35% of total labour force. Once considered a breadbasket for Europe, agriculture plays an important role in Romania. However, the sector requires further development. It suffers from fragmented ownership, use of archaic agricultural methods and a lack of markets. Romanian farmland is of good quality with corn, wheat, vegetable oil seeds, vegetables, apples and grapes being the main crops and sheep and pigs the most common livestock. Wine production has a major role in the agricultural production, too. Romania has the highest proportion of rural population in the EU (45%), the highest incidence of rural poverty (over 70%), and one of the largest gaps in living and social standards between rural and urban areas


Automotive

The Romanian automotive industry has experienced rapid expansion in the last few years as several of the world’s leading car manufacturers have opened new production facilities in the country. Thus, the sector is now dominated by foreign investors with an ever growing concentration of car manufacturers and spare parts suppliers. Foreign companies are attracted by the cheap, yet relatively experienced and educated labour force as well as open access to other EU markets. The automotive industry employs approximately 120,000 people the industry represent over 10% of Romanian GDP. Daewoo and Dacia are the market leaders responsible for 73% of the total car production and Ford has recently taken over one of Daewoo’s production plants in Craiova. As a result an increasing number of suppliers of spare parts are opening facilities in Romania. Currently 58% of the spare parts used by Daewoo are domestically produced.


Oil, Gas & Mining

Romania has considerable oil and gas reserves and also a highly developed refining industry. The average annual oil production reaches 150,000 barrels a day and there are 950 million barrels in crude oil reserves. Natural gas resources are estimated at 3.6 trillion cubic feet; however imports are still a necessity in order to cover the domestic consumption requirements. Major British companies present in the market include Aurelian Oil, Rotork, Daniel, Air BP, Jet Lube, Perry Equipment, Sterling Resources and Bushco. The vast majority of oil and gas companies are heavily involved in climate change reduction investments. The plans for the Nabucco pipeline project involve Romania’s gas company Transgaz and will supply Romania with natural gas from the Caspian Sea. Romania is a key holder of coal, gold, copper, silver and uranium reserves, and is preparing a new mining law that will allow for the reopening of some of 550 mines, including about 100 coal mines, closed over the past years for economic ineffectiveness, failure to meet environmental standards and outdated technology.


EXPORTS & IMPORTS


Romania is not excessively open to international trade – its export/GDP ratio at 42% is among the lowest in Europe. The leading export commodities are automotive & equipment, wood & furniture, food products, chemicals, petrochemicals. Main imports include automotive & equipment, industrial equipment, food products and cosmetics.


2015 export and import data:




Main import partners:
Germany - 19.8%
Italy - 10.9%
Hungary - 7.9%
France - 5.6%
Poland - 4.8%


Main export partners:
Germany - 19.8%
Italy - 12.4%
France - 6.8%
Hungary - 5.4%
United Kingdom - 4.4%


Romania external trade - 2015



See references for our track record in Romania.



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