Home Page
Romania Home
Economy Home
Contact Info
Economy
Romania is a country with a transition economy. The reconstruction process started in 1990 has determined a decrease of production in all fields of activity in the context of a pronounced lack of financial funds and equipments as well as of an unfavorable international climate. Starting from 1994, a recovery process of industrial production, has been under way accelerated in the last 2 years, based on monetary macro stabilization (inflation decreased from 296% in 1993, to 56,9% in 1996 and 34,5% in 2001). In general, there are substantial changes in GIP structure (gross internal product): a decrease of the industry and construction percent (32,4% in 2000), as well as in agriculture (11,4% including forestry and pisciculture) is accompanied by an increase of services percent, due to the dynamic growth of some activies (mostly trading activities), as well as to primary and secondary sector hard conditions. On the whole, GIP (gross internal product) has been registering positive growth in the last 2 years: 1,3% in 2000 compared to 1999 and 5,3% in 2001 compared to 2000.
Industry
Industrial production has grown in 2001 by 8,2% compared to 2000, by 9,6% in the processed industry field and by 4,9% in mining.
Romanian car and equipment export increased considerably
In the field of processed industry, production was higher, in absolute volume, in most branches, significant growths have been registered by the most exportable products (machines and outfits +14,8%, textile +15,1%) as well as by rubber and plastic materials processing field (+26,3%), beverage and food industry (+17,1%), metallurgy (+10,7%) and so on. Starting the first unit of the Nuclear Station at Cernavoda (1999) the electric energy balance has changed: 60,8% thermo energy, 28,6% hydro energy and 10,6% atomic energy (reported to the 51,6 bil KWH production of 2000).
Agriculture
Although since the second world war, growing plants activities has been diversified, cereal culture has remained preponderant. There have been added industrial plants such as sunflower, white beet, potatoes and vegetables. An important place is taken by viticulture (with famous vineyards and wines) and fruit crops. Romania ranks well in Europe and in the world in terms of several agricultural products: 9th place in the world (2nd in Europe) for maize, 8th place (5th in Europe) for sunflower, 6-8th place for grapes and wines. At the end of 2001 livestock balance (thousand heads) was the following: cattle (2815,7), swine (4491,1), sheep and goats (7805,4).
Transports
Romania has a diversified network of transportationways (railways, airlines, roads, maritime, fluvial, combined, special ways) and transport means. The road and railway traffic are preponderant, both regarding the number of passsengers (almost 100%) and the number of goods (93%). The main road, railway and airline center is the capital, wherefrom are distributed the principal main lines and transport ways. Eight main railway lines cross the border, five of them being part of the main European European railways corridors. Nine national roads crossing the frontier border, out of which four are part of international routes (the European ones having E code). Romania is part of the important route of rivers and channels (Rhine-Main -Danube), which cross Europe from the North Sea to the Black Sea. Constanta is the biggest port in the entire Black Sea Basin; the international airport Bucharest-Otopeni, recently modernized (about 3 bil passengers annually) has flights to about 50 large cities worldwide. There are another 16 airports, out of which 6 both national and international.
Foreign Trade
In 2001, exports in FOB terms amounted to 11385 mil USD while imports in FOB terms amounted to 14354,4 mil USD. Regarding exports, almost 70% of the total amount is taken by five types of goods: textile (26,2%), mechanical machines and outfits, electric equipments, registration or sound and image reproduction machines (14,8%), footwear and similar products (8,6%) and mineral products (6,9%).
Another five types of goods cover almost 70% of the total amount of imports: mechanical machines and outfits, electric equipments, registration or sound and image reproduction machines (22,7%), textile fabrics and articles made of these (16,1%), mineral products (14,4%), chemical industry and related industrial goods (7,8%). In 2001, the percentage of developed countries from the total Romanian exports was more than 74,4% (67,8% to the countries of European Union) and 65,1% (57,3% for the countries of European Union) regarding import's value.
Romania's main commercial partners are: Italy (24,9%), Germany (15,6%), France (8,1%), Great Britain (5,2%), Turkey (4%), Holland (3,4%), Hungry (3,3%), USA (3,1%), Austria (3%), Greece (2,8%) as export partners; Italy (19,9%), Germany (15,2%), Russian Confederation (7,6%), France (6,3%), Hungry (3,9%), Great Britain (3,5%), USA (3,2%) and Austria (2,8%) as import partners.
Tourism
Romania has a high tourism potential, both natural and anthropic. There have been created about 3000 tourism sites, with a capacity of about 300 000 places, whereof one third in hotels and motels. New, ultramodern hotels heve been built, some of them belonging to famous international chain hotels; the range of traditional Romanian restaurants has been diversified and the number of agrotourism has increased. There are many touristic objectives such as: balneary-climatic resorts (helios marine therapy) on the shore of the Black Sea, balneary-climatic resorts (mineral and thermal waters, climatic factors), Romania having at least 160 resorts of this type, mountain resorts for winter sports, cultural tourism related to historical, architectural and art objectives (castles, palaces, churches, monasteries, old buildings, memorial houses, museums, and so on) or etnographic and folkloric ones; the walking trips to the mountain regions, to canyons, caves, waterfalls, anthropomorphic and zoomorphic relief forms.
Direct foreign investments reached 7,8 bil USD on March 2002, main investors being: Holland (14,3% from total), Germany (9,6%), France (8,5%), USA (8%), Cyprus (6,8%).
Romania has made substantial economic and political progress over the past decade, overcoming difficult set backs along the way. The attraction of membership to NATO and the European Union has proven to be a potent driving force for reform in recent years, lessening the impact of a three-year reccession in the late 1990s. Today, there are clear signs that the country's perseverance is paying off.
Take foreign direct investment as an example. In the town of Bacau, a Spanish investor two years ago took over an ailing wood processing plant. Today, that same plant is one of the most advanced in the country, employing 1200 people under international working conditions. In the car industry, France's Michelin group is refurbishing a large number of tyre plants. And in Galati, the international steel group LNM has committed to the restructuring of steel complex Sidex, which was once indirectly contributing an estimated 14 per cent of GDP.
In all these examples, foreign companies are bringing technology, investment, experience, jobs and training to Romania. Moreover, these businesses will in time be shipping products abroad to compete with internationally recognised brands. Curiously, however, such examples are not as numerous as one might expect in a country of Romania's size and potential. In 2001, the country attracted about 1,2 billion euros in foreign direct investment, much lower in per-capita terms than FDI to neighbouring economies in Central Europe. The principal challenge ahead will be for Romania to attract greater investment.
Indeed, investment could be a powerful ally to a country faced with difficult budget choices. Romania must deal with the twin problems of a fiscal and external deficit. Over coming them should most likely require tight fiscal and monetary control. But this might strain domestic demand, arguably the biggest source of last years's welcomed 5,3 per cent growth. Sources of revenue will need to be found and investment can be a crucial contributor. The bulk of it could come from privatisation revenues. However, attracting brownfield and greenfield investments is key to secure a stable inflow of capital, especially once the privatisation process would near completion. To this end, Romania is taking essential action to strengthen the investment climate and promote entrepreneurship. The Government has also begun the restructuring and privatisation of large industry and public utilities. Key to this will be maintaining a decisive momentum.
The EBRD is actively supporting this process. In 2001, the Bank committed 282 million euros in new projects. This year we hope to do more, particularly towards developing the small business sector, further strengthening the municipal and industrial sectors, and promoting the prospects for investment generally.
It is clear to me that Romania is progressing towards a free market economy. Hosting conferences for NATO and the EBRD as well holding last year's chair of the OSCE, demonstrate the country's ability to offer leadership on an international stage. Over the next few days, the EBRD's Annual Meeting will give Romania the chance to highlight its achievements and outline its plans for the future. The credibility that Romania deserves will strengthen through the actions it needs to take. The EBRD remains a willing partner to support Romania in this process.
"In 2001, the Bank committed 282 million euros in new projects. This year we hope to do more, particularly towards developing the small busineess sector, further strengthening the municipal and industrial sectors, and promoting the prospects for investment generally."
The EBRD's Board of Governors is holding a meeting each year on April or May, either in London or in one of the countries where the Bank has invested before. The Annual Meeting is the EBRD shareholders' occasion to provide support and guidance to the Bank in the next year.
The meeting is attended by shareholder's delegations from 62 countries and institutions. At the time of the meeting, the EBRD will organize the associated Business Forum. The teme will be sharing the benefits of long-term investment. Regarding the potential effect that current economic instability may have in the world, focus on the benefits of long-term investment is now more crucial. The 2002 Business Forum's program will include several high-level seminars, 27 country presentations and other business events, the Business Forum will offer important partnership opportunities between government representatives and business participants, providing facilities of top-level meetings with EBRD staff.
About 700 high-level government representatives and other special guests, over 1000 international banking and business people, senior officials of the Romanian government and a large number of business representatives in Romania, senior and top-level EBRD staff and around 300 journalists from within and outside the region will attend this Reunion.
The EBRD Business Forum is the unique opportunity to:
The 2002 Annual Meeting and Business Forum will take place in Bucharest, the political, economic and social heart of Romania at the Parliament Palace in Bucharest. The 2003 Annual Meeting will take place in Tashkent, Uzbekistan between the 4th and the 6th of May 2003.
The Meeting of 2004 will take place in London between the 18th and the 20th of April. The EBRD's meeting that will be held in this year in Bucharest is regarded by businessmen in Romania as a great opportunity of making new partnership relations. This is a fact both for the Romanian politicians and from abroad. The Minister of Public Finance, Mihai Tanasescu is telling that the EBRD's Annual Council Board of Governors between 19th - 20th of May, in Bucharest is the admittance of fact that Romania "goes straight on the way towards the adhesion to the European Union". Meanwhile, Bucharest will become for a few days the "international capital of finance", as 3000 representatives from 65 states will attend the Reunion. In his turn, the President of EBRD, Jean Lemierre, was saying not so much time ago that "...the EBRD's Reunion, which will take place in Bucharest in May will bring Romania hundreds of investors and will be an opportunity of involving them in new business". "The message I give to all investors is that the business climate has improved a lot in Romania, this means a good chance of investing in the private sector of this country. The second thing is that many reforms should be made. EBRD is committing itself to financially support these reforms. Concerning the privatization process, we are interested in supporting the Government in the case of Romanian Commercial Bank and Petrom. It will be up to the Romanian Government and I am not in the position to tell now what decisions should be taken in these cases. I also discussed with Romanian authorities how to improve the energy sector, wherein there are many challenges now", added Lemierre. But the President of EBRD showed, that there can't be economic progress in a corrupted business climate. "Corruption is a disaster. I've received certain statements that important steps will be made regarding struggle against corruption. There is a political commitment and a strongly defined program." Lemierre stated. The President of EBRD showed that one of the most important unsolved problems is the excessive consumption of energy, and appreciated that major investments shoul be made to make the price more accessible. The investments made by EBRD will continue to focus on financing the projects for small and medium size enterprises, the field wherein European Bank has operated many credit lines, added the President. The Performance of Romanian economy depends mostly on the improvement of public infrastructure and on much better public services, appreciated Lemierre, and EBRD will finance a range of projects from this field. "We are committed to financing projects of public infrastructure, mainly transports, highways, thermo energy and water supply. These tasks are of major importance in raising the country's competitiveness", said Lemierre.
"In Romania, there has been a wave recently of structural reforms and new momentum in privasitation, and this should be capitalised upon. There is significant potential for investments in energy, oil and gas, municipal infrastructure", said Noreen Doyle, the EBRD's First Vice President.
"The projects for Romania submitted since the beginning of this year to the debates prior to their preesntation in EBRD Council amount to about 250 million Euro", said Antonio Maria Costa, EBRD General Secretary.
Cornel Cojocaru, Communication Manager of RCB, the important bank in Romania, shows that the EBRD's Reunion of Bucharest is a promotion campaign for Romania. "Those coming in Romania will be able to see reality with their own eyes and I think that this will cause the international financial community's confidence in Romania. A range of economic contacts will be established in particular, that could turn into success partnerships in the near future."
Similarly, Mr Aurel Dochia, Economic Analyst and Supervising Manager of Societe General's Assets, is telling us: "different businessmen coming here will notice that conditions in here are not so bad after all. From my own experience I've seen that meny times, people who came here appreciated that the business climate is not so bad as they knew before. That doesn't mean that contracts will be signed immediately, but this might happen. And if we have something more to say about Romania's achievements that will result after, we shouldn't forget about tourism business. More than 3000 representatives coming at this Reunion represent more than a quarter of the number of foreign tourists that Mr Agathon is looking forward to seeing at the seaside next summer." The Annual Reunion will be folllowed by many other events, such as Businessmen's Forum, Romanian Forum for Investments as well as the Reunion of Ministers of Finance from candidate states for the European Union. The Finance Ministers of these countries will meet at the second Reunion of 13 Group that will be presided by Romania.
In the last ten years, Romania's promotion abroad was "made" only by homeless children, thieves and beggars who invaded Europe and the miners' violence who were trying to impose by force a series of social protests (keeping "alive" some unprofitable mines). These images, together with the always changing legislative framework turned away foreign investors. The result was a quasi isolation of Romania in the economic field. Although those who had the courage to come here and the patience to struggle against inactivity and continuously changing rules didn't regret it. Romania was offering and is still offering a series of success business opportunities. The unexpected success of several companies in mobile communications or in brewery is already known. Even the financial banking climate was offering and still offers profit rates never met in Europe. We see now an improved image of Romania on international political and financial climate and even in the way Romanian realities are seen by international mass media (the declarations of several German politicians or articles of prestigious publications such as Wall Street Journal of Financial Times prove that).
There is in fact a vicious circle. Mass media all over the world had a negative perception of Romania, while the politicians or businessmen who already knew the Romanian realities avoided taking a position (in Romania's favor) contrary to mass media. On the other hand, even due to this communication blockage interfered at the level of political people or businessmen, mass media had access only to information of some type about Romania (negative ones in most cases).
Despite all these, in the last 6-7 months, this vicious circle seemed to be overdone. The first step was made by the mass-media channels that presented another image of Romania, not only as the country of beggars, homeless children or trade-unions' violence. Meanwhile, more and more politicians and businessman spoke in favorable terms about Romania. We hope this view will last much longer. EBRD's Reunion of this year will probably help this, too. We shouldn't forget that here come over 300 journalists from all over the world. We shouldn't forget that they would tell what they see now in Romania, to tens or hundreds million people - readers, listeners or TV viewers.
Over 700 government officials and special guests, from countries where EBRD is present, and about over 1000 businessmen and representatives from international financial banking system will see with their own eyes Romanian realities and - why not -, may be convinced by these they might come and establish relationships here. Some time ago, the Rating Agency Standard & Poor made a positive change regarding Romania's marks, from B and B+ for long period debt in currency and from B+ to BB- for long period debt in national currency, proving that the improvement of economic climate in this country didn't go unnoticed by the international financial circles.
In the latest EBRD's communique, coming to support the statements of Mr Jean Lemierre, the President of EBRD, the same idea was illustrated of encouraging the investors' coming into the region, and particularly into Romania: "... it is felt the increase of serious investment opportunities in Central and Eastern Europe as well as inside the Community of Independent States." Following that, the EBRD's involvement in this field will be much bigger in the next years. "The EBRD's investments could double this year compared to 2001, when funds for Romanian projects amounted 282 mil Euro", stated Antonio Maria Costa, the General Secretary of EBRD, in April, 2002, at a press conference. The General Secretary of EBRD showed that projects meant for Romania, debated since the very beginning of this year by the Council of EBRD amounted to about 250 mil Euro. Antonio Costa mentioned that in Central and Eastern Europe, as well as in former Soviet Union, positive changes have been registered in the last 2 years, after they struggled against economic crisis. The states in this region have felt at a small level the effects of the economic recession in the entire world. Regarding Romania, Costa appreciates that the economic progress was positive, mostly in the previous year. The EBRD's representative thinks that Romania experienced one of the most totalitarian regimes in the entire region during the communist period and struggled against profound economic crises in the first half of the 90's, accompanied by significant political changes. "Currently, mostly in the previous year, tings are going on well in Romania, but it could be better", added Costa.
| Last update: 2002, October 11 | |||||||||
| Go to: |
Home Page |
Romania Home |
Economy Home |
Contact Info | |||||