GDP and growth
Macroeconomic environment
In 2019 Romania stood as the third best performing country in EU with a 4.1% GDP growth, driven by private consumption and an investment rebound. The economy received a massive blow in the second quarter of 2020 due to the constraining effects of the Covid-19 pandemia (the biggest economic contraction in the past 24 years). According to Eurostat, the GDP dropped by 10.5% year-on-year, marking a steep fall. Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, the economic activity decreased by 12.3% in Q2. The main sectors affected were health, businesses, labour market and households.
In the last quarter of 2020, Romania’s GDP declined by 1.5% compared with Q4 2019, but at the same time it jumped by 5.3% compared to Q3 2020, reaching one of the highest growth levels in EU27 (4.8% on seasonally adjusted series, according to Eurostat).
The labour market has tightened in 2019 at 3.9%, the lowest unemployment rate in 15 years, increasing to 4.9% in 2020.
In 2020, the inflation was 2.6% and is set to drop further in 2021, as the National Bank target is 2.5%.
GDP Growth (YoY, %)
Source: National Institute of Statistics; *National Commission for Strategy and Prognosis – Winter Forecast 2021, 18 January 2021
Economic growth
Even though Romania recorded a positive economic growth in the first quarter of 2020, ranking second in EU27 with 2.7% GDP growth compared with the European average of -2.5%, in the second quarter the economy crossed into negative territory (Eurostat). As the EU has been facing the biggest economic turndown over the past 25 years, the Romanian economy contracted by 3.9% in 2020 compared with 2019. Romania expects a GDP growth of 4.3% in 2021, according to the National Institute of Statistics.
In 2020, at current prices, the Romanian nominal GDP was EUR 217,82 billion, according to Eurostat.
Demand side components evolution*
*Current prices, million euro
Source: Eurostat, March 2020
FDI – flows / stock
FDI flows
In 2019 FDI net flows stood at EUR 5.2 billion, according to the National Bank of Romania’s report – “Foreign Direct Investment in Romania in 2019”.
The FDI net flows in 2019 went primarily to trade (EUR 1,804 million), industry (EUR 1,343 million) and to financial intermediation & insurance (EUR 1,102 million). Significant FDI flows were also channeled to manufacturing (EUR 980 million), its main sub-sectors that benefited from foreign direct investment being food, beverages and tobacco (EUR 309 million), transport means (EUR 214 million) and machinery and equipment (EUR 93 million).
FDI flows (billion euro)
Source: National Bank of Romania
Annual Report “Foreign Direct Investment in Romania in 2019”
& *Monthly Bulletin January 2021
FDI stock
At the end of 2019, FDI stock amounted EUR 88.3 billion rising by 8.9% compared to 2018. At the same time, equity of FDI enterprises (including reinvestment of earnings) totalled EUR 61,352 million (69.5% of the closing FDI stock). Also, net credit taken by direct investment enterprises from foreign direct investors and other companies in the group reached EUR 26,952 million (30.5% of the closing FDI stock).
FDI stock was channelled primarily to manufacturing (29% of total FDI stock), where the largest recipients were: transport means (22,4%), oil processing, chemicals, rubber and plastic products (20.4% of total FDI stock), metallurgy (12.4%), food, beverages and tobacco (10.4%).
At the end of 2019, all main economic activities registered significant increases in FDI stock compared to 2018. Thus, broken down by sectors, industry has been the leader with EUR 2,337 million (up by 7.0%), followed by trade with EUR 1,816 million (up by 14.1%), construction and real estate transactions with EUR 1,277 million (up by 9.4%) and financial intermediation and insurance with EUR 844 million (up by 9.1%), according to the National Bank of Romania’s report – “Foreign Direct Investment in Romania in 2019”.
FDI Stock (billion euro)
Source: National Bank of Romania, Annual Report “Foreign Direct Investment in Romania in 2019” & **Interactive database March 2021
FDI stocks for 2009-2019 were recalculated based on the BPM6 methodological framework
FDI stock – end of 2019
Structure by sector* (%)
Source: National Bank of Romania, Annual Report “Foreign Direct Investment in Romania in 2019”
*EUR 88.3 billion
Spread in Services sector* (%)
Source: National Bank of Romania, Annual Report “Foreign Direct Investment in Romania in 2019”
*EUR 35.1 billion
Spread in Industry sector* (%)
Source: National Bank of Romania, Annual Report “Foreign Direct Investment in Romania in 2019”
*EUR 35.6 billion