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Economy

GDP and growth

Macroeconomic environment

Overall, Romania’s macroeconomic situation is one of the strongest in EU in terms of real GDP growth, fiscal deficit and public debt, inflationary pressures and current account balance, with positive evolutions expected by some credit rating agencies. The output gap is projected to close in the 2nd half of 2016 amid strong recovery of the internal demand, especially in the private sector. The real GDP growth rate was 3,8% in 2015 Q4 compared with 2014 Q4, one of the highest in EU28, with forecasts maintaining a positive outlook.

Economic growth

However, economic growth has been robust since 2013, driven by strong exports and strong industrial production in 2013 and 2014. At the same time, a gradual recovery of domestic demand took place during 2014. Real GDP is estimated to have increased by 3.7 % in 2015 on account of surging consumption and recovering investment. In current prices, the nominal GDP is above EUR 160 billion according Eurostat.

On the production side, growth was fueled by the recovery of two important sectors (construction and industry). In the same time, on the demand side there was a strong surge in private consumption and investment due to increases in wages and a decline in the standard VAT rate.

Economic growth forecast

Current forecasts estimate growth at 4,2% in 2016 and 3,7% in 2017, according to the European Commission’s forecasts for Romania following the pro-growth fiscal policy, including tax cuts.

FDI – flow, stock and main sectors

FDI flow and stock

In 2014, FDI net flow stood at EUR 2,421 million. As in previous years, the FDI net flow went primarily to manufacturing (EUR 929 million), while the main sub-sectors benefiting from foreign direct investment were transport means (EUR 411 million), manufacture of computer, electronic, optical and electrical products (EUR 168 million) and metallurgy (EUR 158 million); other sectors reporting significant capital investment were construction and real estate transactions (EUR 646 million), information technology and communications (EUR 253 million) and trade (EUR 225 million).

At the end of 2014, final FDI stock reached above EUR 60 billion. On structure, equity (including reinvested earnings) of FDI enterprises amounted to EUR 43,2 billion (71.8% of the final FDI stock) and total net credit taken from foreign direct investors reached about EUR 17 billion (intercompany lending included) or 28.2% of the final FDI stock.

FDI stock by sector

FDI was channeled primarily to manufacturing (32.0 percent of total FDI), out of which the largest recipients were: oil processing, chemicals, rubber and plastic products (5.7 percent of total FDI), transport means (5.4 percent), metallurgy (4.5 percent), food, beverages and tobacco (4.0 percent), cement, glassware, ceramics (2.6 percent) and wood products, including furniture (2.5 percent).

Apart from industry, other activities that also attracted significant FDI were financial intermediation and insurance (13.0 percent of total FDI), trade (11.7 percent), construction and real estate transactions (9.8 percent), information technology and communications (6.0 percent).