ROMANIA
The largest Balkan republic, a country located at the crossroads of Central, Eastern, and Southeastern Europe
Total area: 237,500 sq km (slightly smaller than Oregon)
Population: 19.5 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: (Ms.) Vasilica Viorica Dăncilă (since January 2018)
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
Due to the financial crisis, Romania endured an economic slowdown, especially in the automobile sector, which is subject to foreign demand. Financial difficulties pushed Romania to seek financial help from the IMF, the European Commission and the World Bank. More recently, the Romanian economy was the fastest growing economy in the EU, but this economic boom began to fade out in 2018 (4.0%) and is expected to slow down to 3.4% and 3.3% in 2019 and 2020 respectively.
Annual average inflation remained at 4.7% in December 2018 and IMF expects inflation averaging 2.7% in 2019 and 2.8% in 2020. Public debt declined in the last years despite higher government spending, but is expected to grow again (37.2% of GDP in 2018 and 38.8% in 2019).
An aging population, emigration of skilled labor, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package compromise Romania’s long-term growth and economic stability and are the economy's top vulnerabilities. With 35% of population at risk of poverty, Romania remains one of the poorest countries in Europe. Unemployment has decreased in the last years (4.8% in 2019 according to IMF estimates), but the country's informal economy remains significant, and participation rate for Hungarian and Romani minorities, young people and women in the economy is low.
According to Eurostat, Romania's GDP per capita (PPS) was at 64% of the EU average in 2018, an increase from 41% in 2007 (the year of Romania's accession to the EU), making Romania one of the fastest growing economies in the EU.
Selected economic indicators, Romania, 2012 - 2018
| |
|
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
| GDP |
|
|
|
|
|
|
|
|
| Real GDP growth |
% |
0.6 |
3.5 |
3.0 |
3.8 |
5.0 |
5.5 |
|
| GDP at current prices |
€ bn |
133.51 |
144.25 |
150.23 |
160.35 |
170.39 |
187.52 |
202.88 |
| Foreign trade |
|
|
|
|
|
|
|
|
| Exports |
€ bn |
50.02 |
57.34 |
61.93 |
65.89 |
70.15 |
77.87 |
84.48 |
| Imports |
€ bn |
56.66 |
58.48 |
62.39 |
66.74 |
71.75 |
81.85 |
90.99 |
| Balance |
€ bn |
-6.64 |
-1.12 |
-0.46 |
-0.84 |
-1.57 |
-3.98 |
-6.51 |
| Prices |
|
|
|
|
|
|
|
|
| CPI - average inflation rate |
% |
3.3 |
4.0 |
1.4 |
-0.6 |
-1.6 |
1.3 |
4.6 |
| PPI – industry - average |
% |
5.4 |
2.1 |
-0.1 |
-2.2 |
-1.8 |
3.5 |
5.0 |
| Employment |
|
|
|
|
|
|
|
|
| Registered unemployment |
% |
7.0 |
7.3 |
6.8 |
6.8 |
6.8 |
6.7 |
6.6 |
| Average monthly gross wage |
€ |
479 |
507 |
524 |
576 |
643 |
725 |
964 |
| Exchange rates |
|
|
|
|
|
|
|
|
| RON/USD average |
|
3.4695 |
3.3278 |
3.3487 |
4.0056 |
4.059 |
4.052 |
3.942 |
| RON/EUR average* |
|
4.4593 |
4.4190 |
4.4437 |
4.4454 |
4.4907 |
4.5690 |
4.6541 |
Source: Romanian Statistical Yearbook, Romanian Institute of Statistics, IMF, Eurostat, 2017-2018
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
Agriculture represents around 4.4% of Romania's GDP and employs 22.3% of the country's active population. The main resources and agricultural production in Romania are cereals, sugar beets and potatoes. However, production remains very low in comparison with the country's potential capacity (more than 58% of the land is agricultural). About 25% of the country is covered by forest (especially around Transylvania), and the logging industry is developing very fast. Romania has limited energy dependence (23%) thanks to coal, oil, gas and uranium.
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.
Services & ICT
Romania's economy is mainly centred on the services sector, which represents 56.18% of the GDP and employs nearly 48% of the nation's workforce. Tourism, in particular, is booming with almost 11 million tourists in 2017. The technology sector has also seen immense growth in recent years, due to the emergence of a high-qualified workforce whose cost is lower than the European average. Romania's ITC sector reached 6.2% of GDP in 2017 (compared to 5.5% of the GDP in 2016) and is expected to increase to 12% of the GDP by 2025. At the moment, this sector gives employment to 150 thousand people and is expected to reach between 230-250 thousand by 2025.
EXPORTS & IMPORTS
Romania is not excessively open to international trade – its export/GDP ratio at 41.4% (2017) 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.
2017 export and import data:
Main import partners:
Germany - 20%
Italy - 10%
Hungary - 7.5%
Poland - 5.5%
France - 5.3%
China - 5%
Netherlands - 4%
Main export partners:
Germany - 23%
Italy - 11.2%
France - 6.8%
Hungary - 4.74%
United Kingdom - 4.1%
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See references for our track record in Romania.
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