How do you assess the current economic situation in Romania?

Romania with a population of 19 million people is the largest and most important partner for trade and investment in the region of South-Eastern Europe. The Romanian economy has grown continuously in recent years and had one of the largest growth rates in Europe. The strong growth weakened in 2018 and 2019 – in 2019 the Romanian economy grew by 4.1 per cent. 
The gross fixed capital formation in Romania grew by 8 per cent in 2019, which is very positive. Romania’s consumer goods market also expanded in 2019. Private consumption has been increasing steadily for years, which always meant great opportunities for investors. The unemployment rate continued to drop in 2019 to 3.9 per cent. 
The imports grew in 2019 by 5.1 per cent and exports by 2 per cent. The most important import products are: mechanical and vehicles engineering products and processed goods. Germany is Romania’s most important trading partner with almost 17 billion Euros in deliveries. 
The main reasons for the good economy in recent years have been tax cuts, high direct investments by foreign companies and generally good economic trends (especially IT, outsourcing, communication, retail and the automotive industry). 

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. Foreign investors still benefit from cheap labor and production costs, as well as an attractive tax level.

In 2019, the following sectors contributed in particular to the growth:

  • Services (3.3 per cent);
  • Construction industry grew 16.6 per cent compared to the previous year;
  • Industry, especially vehicles engineering products (22.6 per cent of GDP);
  • Agriculture (5.0 per cent of GDP).

These sectors offer very good investment opportunities for foreign investors and have good, growing potential.

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

The most challenges German companies have to face in Romania are the shortcomings in the infrastructure and a lot and sudden changes in the law. The administrative structures are not or only very slowly modernized or digitised. The political leadership often changes, which means the continuity and implementation of many projects – (e.g. in the infrastructure) is not possible. 

What is the significance of Germany for Romania?

Germany is Romania’s No. 1 trading partner. In the first half of 2019, imports from Germany had an amount of 8.6 billion Euro and that is 2.5 per cent more than in the same period in the previous year. Exports amounted to 8.1 billion Euro, i.e. 3.3 per cent more than a year earlier. The total trade volume between Germany and Romania was 16.7 billion Euro. The main products include machinery and electronic equipment, vehicles and metal products.

Currently there are 7,500 companies with German share capital active in Romania. This means that 10 per cent of foreign companies in Romania are German or have a German equity investment. They employ over 220,000 people and generate sales of over 27 billion Euros (according to the German-Romanian Chamber of Commerce).
   

In your opinion, how will Romania develop?

Romania’s economy has been growing steadily in recent years. This rapid growth is weakening somewhat in the past two years but remains at the 4 per cent level. Less growth was expected for 2020 and 2021 before Covid-19 broke out, but it should be well above 3 per cent per year. Foreign investment should also increase in 2020 and 2021, according to estimates. Given the worldwide outbreak of Covid-19 and the associated weaker global economy, the Romanian economy will most likely also weaken. The Romanian government has already taken economic and tax measures to support businesses. To what extent these government measures will be efficient is currently rather difficult to predict, but they have a positive impact at the moment.

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