Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
ource: Statia 2021
Romania is a European Union member state located in the south-eastern part of Europe, with a surface of 38,397 square kilometers and a population of 19.41 million.
Romania is positioned in the vicinity of several large markets, including the European Union, the CIS states and the Middle East and is also home to a third of the Danube as well as of the largest and deepest harbor at the Black Sea (Constanta), which is deemed to provide a competitive advantage with regard to the transportation of Asian goods by sea3.
Bucharest (the capital and Romania’s largest city) has been the top FDI destination in the country for more than a decade. Nevertheless, there is interest for other regions, particularly the Western part of Romania, with cities such as Cluj-Napoca, Timisoara and Oradea attracting a substantial amount of investment.
Romania is a market with vast potential and a strategic location, though with a challenging business climate. This report is intended to aid American companies in developing and executing new and increased sales to this important and promising – yet still transitional – EU market.
The economy of Romania is a high-income mixed economy with a very high Human Development Index and a skilled labor force, ranked 10th in the European Union by total nominal GDP and 7th largest when adjusted by purchasing power parity. Romania is a leading destination in Central and Eastern Europe for foreign direct investment. Romania is the largest electronics producer in Central and Eastern Europe. In the past 20 years, Romania has also grown into a major center for mobile technology, information security, and related hardware research. The country is a regional leader in fields such as IT and motor vehicle production. Bucharest is one of the leading financial and industrial centers in Eastern Europe. The top 10 exports of Romania are vehicles, machinery, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, and rubber and plastics.
Romanian GDP increased by 6.5 year-on-year percent in the first quarter of 2022, accelerating from 2.4 percent growth the previous quarter. According to a preliminary estimate, it was the fourth consecutive quarter of GDP growth, despite easing Covid-19 measures and low base effects last year. After a revised 1% expansion in the fourth quarter of 2021, the economy grew by 5.2 percent on a seasonally adjusted quarterly basis, the highest level since the fourth quarter of 2020.
Romania’s sovereign rating was reaffirmed by S&P on April 15 at BBB-, in accordance with the other two major rating agencies and slightly over the investment grade lower border. The country’s sovereign rating has a “stable” outlook, according to the agency. It has decreased its growth prediction for this year to 2.1 percent, although it still expects strong growth in the coming years (+4.5 percent in 2023).
In April 2022, Romania’s annual inflation rate increased to 13.76 percent, up from 10.15 percent the previous month. This was the highest reading since February 2004, as food costs continued to rise, reaching their highest level since December 2003. (13.54 percent vs 11.2 percent in March). The expense of both services (7.11 percent vs. 6.50 percent) and non-food products added to the rising pressure (16.35 vs 10.90 percent). Consumer prices rose 3.74 percent on a monthly basis in April, the biggest since July 2000, following a 1.9 percent increase in March. The inflation prediction for the end of 2022 has been reduced from 12.5 percent to 4.1 percent, while inflation in the following year is projected to be higher than previously expected. For 2023, panelists see inflation averaging 4.2%.
The COVID-19 pandemic has affected the global economy and several aspects of life in most countries in the world. The degree of impact varies across countries in terms of the number of cases and the effects on the society and economy. In the Lowy Institute Ranking of the relative performance of countries in the crisis, Romania was ranked 81st.
According to United States Census Bureau data, the total volume of trade between Romania and the United States amounted to almost three billion dollars at the end of last year and almost one billion euros at the end of March 2022.