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GDP and growth

Macroeconomic environment

Romania’s macroeconomic situation is one of the strongest in EU in terms of 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 GDP growth rate was 4.9 in 2016, 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 output in 2013 – 2015. At the same time, a gradual recovery of domestic demand took place during 2014 – 2016. Real GDP was estimated to have increased up to 4.9% in 2016 on account of surging consumption and recovering investment. In current prices, the nominal GDP is above EUR 160 billion according to Eurostat.

On the production side, growth was fueled by the recovery of two important sectors (construction and industry). At the same time, on the demand side there was a strong surge in private consumption and investments due to increase in wages and fiscal incentives.

Economic growth forecast

Current forecasts estimate growth is 5.2% in 2017, according to the National Prognosis Commission, following the pro-growth fiscal policy, including tax cuts, and the positive economic evolution from the past years.

FDI – flow / stock

FDI flow

In 2015, FDI net flow stood at EUR 3,461 million.
The FDI net flow went primarily to trade (EUR 1,000 million) and to financial intermediation & insurance (EUR 926 million). Significant FDI flows (EUR 745 million) were also channeled to manufacturing, its main sub-sectors that benefited from foreign direct investment being transport means (EUR 532 million), oil processing, chemicals, rubber and plastic products and machinery and equipment (EUR 183 million each) and manufacture of computer, electronic, optical and electrical products (EUR 133 million).

FDI stock

At the end of 2015, FDI stock amounted to EUR 64,433 million. As far as the structure is concerned, equity of FDI enterprises (including reinvestment of earnings) totaled EUR 45,098 million (70% of the closing FDI stock) at the end of 2015. Also, net credit taken by direct investment enterprises from foreign direct investors and other companies in the group to which the investor belongs to, reached EUR 19,335 million, i.e. 30% of the closing FDI stock.

FDI stock was channeled primarily to manufacturing (31.8 % of total FDI stock), where the largest recipients were: oil processing, chemicals, rubber and plastic products (6.0 %of total FDI stock), transport means (5.9 %), metallurgy (4.1 %), food, beverages and tobacco (3.4 %), machinery and equipment and wood products, including furniture (each holding 2.6 % of FDI stock). Another industrial sector, i.e. electricity, gas and water supply attracted 9.8 percent of FDI stock. Apart from industry, other activities that also benefited from significant FDI were financial intermediation and insurance (13.1 % of FDI stock), trade and construction and real estate transactions (12.2 % each) and professional, scientific, technical and administrative activities and support services (6.3 % of FDI stock).