Successfully investing in Romania

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last updated on 4 July 2022 | reading time approx. 3 minutes

 

 

 

How do you assess the current economic situation in Romania?

Romania remains an attractive destination from a foreign investor’s perspective and one of the most energy-in­de­pendent countries in the EU. After a solid recovery from the pandemic the Romanian economy, like other EU countries, is also facing the negative effects of the conflict in Ukraine, including mainly a rising inflation. 
 
According to the National Institute of Statistics (INS), the GDP increased by 6.5 percent in the first quarter of the year, especially due to the impact of the high energy prices on energy consumers and also as a result to the lifting of Covid-19 restrictions which increased the activity. Further data adjustments and the long run trends in the global economy should be regarded with caution.
 
Moreover, the decision of the European Commission regarding Romania’s admission into the Schengen zone will most likely help the long-term economic growth.
  
The gross fixed capital formation in Romania registered an increase of 5.2 percent sending a positive signal to the economy, being one of the highest growth rates in the EU. The growth was supported by a boosted activity in commerce, services and also in the IT&C sector, thus compensating the decline in the industrial activity. However, private consumption remains an important driver of the economy growth.
 
The unemployment rate in Romania remained steady in both 2021 and 2022 after dropping from its highest levels registered during the pandemic year 2020.
  
The main reasons for the good economy in recent years have been tax cuts, high direct investments by foreign companies and the current global economic trends, such as nearshoring and shortening of the supply chains.
 

How would you describe the investment climate in Romania? Which sectors offer the largest potential?

The general investment climate in Romania – as an EU member state and an important partner in NATO – has continuously improved in recent years, while helping Romania to gain credibility in the eyes of investors. For­eign investors still benefit from rather reduced labor and production costs, as well as from a competitive tax system. 
 
Government’s efforts to increase investments through the Relaunch and Resilience Program (PNRR) are ex­pec­ted to boost the sectors of constructions and services in 2022, bringing a major contribution to the country’s economic growth.
 
The Romanian economy is mainly centered on the following sectors: services, construction, industrial produc­tion, agriculture sector and IT&C, as well as renewable energies. These sectors offer very good investment oppor­tunities for foreign investors and have a growing potential.

 

What challenges do German companies face during their business ventures into Romania?

One of the most important challenges German companies have to face while doing business in Romania are the shortcomings in the development of transport infrastructure and a lot of sudden changes in the current legis­lation. The lack of digitalization in the administrative structures, as well as the frequently changes in the poli­ti­cal-economic framework are also affecting the continuity and implementation of many projects (e.g. in the infrastructure).
  

What is the significance of Germany for Romania?

Germany is acknowledged as Romania’s most important trade and investment partner. The German imports and exports to Romania amounted to EUR 33 billion in 2021. With an increase of over 12 percent compared to 2020, the volume of trade between the two countries exceeded even the level registered before the pandemic, as shown by a forecast by the officials of the Romanian-German Chamber of Commerce and Industry (AHK Romania). 
 
Despite the political and economic outlook, the German companies operating in Romania declared to be rather optimistic about the future of their business in this country and they plan to expand their investments in Romania, according a survey conducted by AHK Romania.

   

In your opinion, how will Romania develop?

Given the current geopolitical context associated with a weaker global economy, the Romanian economy will most likely be affected. The Romanian government has already taken economic and tax measures to support businesses, as well as social measures. To what extent these measures will be efficient is currently rather difficult to predict, but they have a positive impact at the moment.
 
Even so, Romania will keep offering incomparable opportunities for foreign investors and a positive business climate, due to its strategic location, tax system and educated labor force. 

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