About Romania

Economic Overview - 2018

• Population: 19,86 million
• Area: 238,391 km²
• Growth in GDP: 4.8% in 2016, 4.3% in 2017 and est. 4% in 2018
• GDP/capita in 2017: 8300 EUR
• Inflation: -0.6% in 2015, -1.5% in 2016 and 1.3% in 2017
• Export: EUR 62641.2 million in 2017 (+9.1%)
• Imports: EUR 75596.9 million in 2017 (+12.2%)
• Monthly average gross wage in economy: EUR 582 in 2016, 712 in 2017 and 950 in 2018

 

After a hard hit in 2008 , Romanian economy started to recover and in the last years posted a solid growth of more than 5% each year, among the highest in Europe. In the same time the public debt is one of the lowest in Europe : around 35%. The long time interest rates are steady increase of 1,2% in the last year, to 5,05%; inflation is on the rise: 3,3% in 2017 and 3,6% in 2018 (forecast), while the real GDP growth estimation is 4,2% (2018) / 3,9 % (2019 ).

All data shows a stable country with real growth potential. In the same time, some opinion leaders who also state that Romania’s economic growth risks setting the stage for hard landing due to lack of structural reforms and fiscal stability.

The region Bucharest-Ilfov is the most developed region in Romania, with a GDP per capita of 139% of the European average. Bucharest thus surpasses other European capitals such as Athens, where the GDP per capita reaches 92% of the EU average, Madrid (125%), Berlin (118%), or Budapest (102%). However, the rest of Romania has a GDP per capita of only 48,4% of the European average. The situation is even worse in regions such as the North-East, where the GDP per capita amounts to 36% or the South region, with 42%.

Education

Romanian educational system performance is low. The number of students is decreasing every year. Most of the professors are using old curricula and methods regarding memorizing information, with little to no regard for critical thinking or creativity; team work is also a rare sight in the classroom. In the same time , system is under-financed and therefore the low salaries don’t act as incentives for teachers. Every year there are problems with the student books and the level of professors entering the system.

By end 2016, there were 7010 educational centers in Romania, out of which 3140 in the rural area. Out of those from rural areas, over 2400 have no indoor plumbing and/or toilets. There were 1,7 mil students in primary and secondary schools and only around 136,000 computers, 83,000 in schools in the rural area. More than 3800 schools have no fire safety approval from public authorities.

The system is slowly changing and professors with modern methods entered the system, but will take time to reshape the system as a whole. There are investment in schools, but the speed of investment is low. Weak performance of educational system limits long-time growth prospects

Because of the low performance of education system, labour and skills supply are not keeping up with changes in the economy, despite the fact the official records shows lowest unemployment rate in decades. There is a lack of workers, especially in blue collar jobs. Investment and development plans are on stand due to lack of labour force.

Wages and Migration

The salary level in Romania is relatively low compared with Denmark, but there is a solid increase in salaries. Romanian Forecast Committee estimates around 5% per year for next few years.
Following the latest increase by summer 2018, salaries in public sector are at the level of Poland, while in private sector salaries are much lower ( 5-9 years behind Poland)

Migration ( Spain, Italy, UK and Scandinavian countries ) is high. Some of the workers which now work abroad will never return to Romania. Many workers are on short term contracts and would prefer to work for a few months abroad and then return home to their family for a short period.

Agriculture

• Romania has a temperate climate, with four seasons.
• 4.4 % of the GDP comes from agriculture, fishing and forestry
• Second largest wheat and corn production in EU in 2016
• Around 30% of the population works in agriculture
• EUR 9.85 billion are available for Romanian farmers for investment projects between 2014 and 2020 from the European Union.
• Total number of farms in 2016: 26,000 companies with 58,000 employees, out of the total 3,422,000 farms        
• Relatively low level of investments: equipment, seeds, fertilizers
• Infrastructure not developed
• Lack of farming associations: farms under 1ha equate to 53% of total farm, but cover only 5.1% of the land
• Crop production: wheat, rye, barley, maize, rice, grapes, peas, beans, sun flower, potatoes, other vegetables.
• Animal production (2016): poultry (73,2 mil.), sheep&goats (11,4 mil.), pigs (4,4 mil), cows (2 mil).

Infrastructure

• Road network: of the 86,000 km Romanian public road network, only 777 km are motorways and around 16,000 km are European and national roads. 
• Railway network: Romania has a network of around 19,000 km of tracks. Container services are readily available.
• Air transport: Romania has 12 main public international airports and few small domestic airports.
• Water traffic: Romania has 2 major harbors at the Black Sea. There are also some important Danube harbors. There are ships connecting Romania to major central European cities.

The quality and length of the infrastructure are one of the lowest in the EU, despite high public spending. The quality of public transport is quite low and therefore a lot of Romanians prefer to use private or company cars. The result is a very congested network of streets and roads. Romania is building several sector of highways, but the construction speed is low.

The future of goods transport in Europe is by rail. The railway sector also needs huge investments in order to reach a decent level. Romania has a network of 19,000 km but the average speed of trains in Romania is 30 Km/h. Modern private trains are available but state owned companies are facing bankruptcy.

IT&C

Romanian Software and IT services market will reach almost 5 bn. EUR by end 2019 according to ITC Association. This represents more than 4% of Romania’s GDP. 75% of the companies are foreign and 25% Romanian owned.
The average growth rate is around 15 % and this trend will continue for the next few years. The bottle neck for the development: no of graduates and available resources. Romania is educating only around 7000 ITC graduates a year, while the industry need at least double; some successful people from the IT/software industry are self-taught. Old, outdated school curricula is prevalent in this area as well, so while the demand for graduates is double the number the universities can provide, it’s important to keep in mind that not all IT people have graduated college.

Danish Companies

There are more than 500 companies with Danish capital in Romania. And many others danish companies working with Romanian partners/ agents/dealers. The trade balance between Denmark and Romania is around EUR 600 mil EUR.

Most of the danish owned companies in Romania are located in Bucharest, followed by Transylvania region.
A very large number of the companies are using the Embassy to enter the market and to facilitate partnerships.
We are running a informal Business Club and we are part of the largest business organisation in Romania, Coalitia, which is the main discussion partner of the Romanian Government. Several top managers from Danish owned companies are members in the relevant Task Forces and have regular meetings and discuss developments and problems with high Romanian officials.