Overview of the Romania Economy: Key Indicators and Trends
Romania's economy is characterized as a high-income mixed economy, boasting complexity and resilience within the European Union (EU). With a total nominal GDP ranking 12th in the EU and the 7th largest in terms of purchasing power parity, Romania is a significant player in the regional economic landscape. The country's commitment to accelerating structural reforms and fortifying institutions aligns with its aspirations to further integrate with the EU.
Notably, Romania has experienced robust economic growth since 2010, outpacing many of its EU counterparts. In 2022, the economy expanded by a better-than-expected 4.8%, reflecting its upward trajectory. This momentum is evidenced by consistent growth rates in recent years, including peaks of 7.1% in 2017. Moreover, Romania's GDP per capita in purchasing power standards has surged to 72% of the EU average in 2020, marking substantial progress from 44% in 2007, the highest growth rate among EU27 members.
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Attracting foreign investment has been a cornerstone of Romania's economic strategy, with the country emerging as a key destination in Central and Eastern Europe. Cumulative foreign direct investment (FDI) since 1989 surpasses $170 billion, underscoring investor confidence in Romania's market potential. Notably, Romania has carved a niche as the largest electronics producer in the region, while also excelling in mobile technology, information security, and motor vehicle production.
Bucharest, the capital city, serves as a pivotal hub for finance and industry in Eastern Europe, bolstering Romania's position as an economic powerhouse in the region. The country's top exports span diverse sectors, including vehicles, machinery, chemicals, electronics, and pharmaceuticals, driving export-led growth.
Furthermore, Romania's industrial sector accounts for a significant portion of the GDP, contributing 33.6% in the first half of 2018. Despite external challenges such as the Russia-Ukraine conflict and subsequent energy crises, Romania has demonstrated resilience. Addressing inflation remains a priority, alongside fiscal consolidation and bolstering tax revenues to support critical sectors like infrastructure, healthcare, and education.
Sustainable productivity growth is identified as a linchpin for elevating living standards, necessitating a conducive investment climate, robust competition, transparent policymaking, financial inclusion, and anti-corruption measures. Romania's economic narrative reflects a dynamic landscape shaped by strategic reforms, innovation, and a commitment to EU convergence.
Sources
Economic forecast for Romania - European Commision
Official Website of the International Trade Administration - Romania - Country Commercial Guide
Economic History of Romania
The economic history of Romania spans several distinct periods, each characterized by significant political, social, and economic transformations.
Before World War II
The foundation of modern Romanian economic development can be traced back to the Treaty of Adrianople in 1829, which liberated Romania from centuries of Turkish control. Key milestones such as the discovery and exploitation of oil in 1857, the political union between Wallachia and Moldavia in 1859, and the adoption of the local currency, the leu, in 1867, laid the groundwork for economic growth. Under the reign of King Carol I, extensive infrastructure projects, including the construction of a vast railway network, further stimulated economic progress.
Following the dissolution of neighboring empires after World War I, Romania witnessed the consolidation of several Romanian-speaking provinces, forming the modern Romanian state. Radical agricultural reforms and the establishment of a democratic framework fueled rapid economic growth, with industrial production doubling between 1923 and 1938, despite the challenges of the Great Depression.
Communist Period
After World War II, Romania fell under Soviet influence and adopted a Soviet-style command economy. Rapid industrialization was pursued to create a socialist society, supported by foreign credits in the 1970s. However, this led to a significant foreign debt, which peaked at $11–12 billion. Austerity measures implemented in the 1980s to repay the debt severely impacted the standard of living for Romanians.
Borzești Petrochemical Plant in 1976 - Platforma chimică de la Borzești., Public domain, via Wikimedia Commons
Free Market Transition
The end of communism marked a period of economic restructuring and transition to a market-oriented economy. Privatization of state-owned enterprises began in 1992, accompanied by fiscal reforms and efforts to attract foreign investment. Romania's accession to the European Union in 2007 further accelerated economic reforms and integration with European markets.
Post-EU Membership
EU membership facilitated trade liberalization and access to a broader consumer market. Romania's adoption of a flat tax rate in 2005 aimed to improve tax collection rates and foster economic growth. The country experienced significant economic expansion, with a 6% growth rate in 2016, the highest among EU member states. Romania's emergence as a tech-startup hub reflects its growing digital infrastructure and attractiveness for investment.
Throughout its history, Romania has navigated various economic challenges and transitions, ultimately striving to achieve sustainable growth and integration within the global economy.
Romania Economic Indicators
Total GDP (PPP): Int$784 billion (2023 est.)
GDP Growth Rate (2022): 4.8%
GDP per Capita (PPP): 72% of EU average (2020)
Cumulative FDI (since 1989): >$170 billion
Industrial Sector Contribution: 33.6% of GDP (first half of 2018)
Top Exports: Vehicles, machinery, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, rubber and plastics
Import Growth Rate (2016): 9.3%
Export Growth Rate (2016): 7.6%
Expected Export Growth Rate (2017): 5.6%
Expected Import Growth Rate (2017): 8.5%
Labour force: 8.214 million (2021)
Employment rate: 61.9% (2021)
Labour force by occupation: Agriculture: 3.1%, Industry & Construction: 35.7%, Services: 61.2% (2021)
Unemployment: 5.4% (2024)
Average gross salary: RON 7,405 / €1,490 / $1,609 monthly (January, 2024)
Average net salary: RON 4,532 / € 912 / $985 monthly (January, 2024)
Exports: $88.3 billion (2021), $73 billion (2020), $81.1 billion (2019)
Main export partners: Germany 19.5%, Italy 9.7%, France 6.0%, Hungary 4.9%, Poland 3.86%, Bulgaria 3.8%, Turkey 3.5%, Netherlands 3.2%, Czech Republic 3.1%, United Kingdom 3.0% (2021)
Imports: $116.4 billion (2021), $90.2 billion (2020), $94.9 billion (2019)
Main import partners: Germany 19.1%, Italy 9.06%, Hungary 6.5%, Poland 6.3%, China 6.1%, Turkey 5.05%, France 4.3%, Bulgaria 3.9%, Netherlands 3.8%, Austria 3.3% (2021)
FDI stock: €100.288 / $114.068 billion (31 Dec 2021), Abroad: €2.793 / $3.177 billion (31 Dec 2021)
Current account: −7.1% of GDP (2024e), −$27.238 billion (2024e)
Gross external debt: €137.2 / $143.8 billion (30 June 2022)
Foreign reserves: Increase €65.117 / $68.419 billion (30 Sep 2023)
Romania Economy - Questions and Answers
What is Romania's GDP growth rate in 2022?
Romania's GDP growth rate in 2022 is 4.8%.
What is the percentage of Romania's GDP per capita in purchasing power standards compared to the EU average in 2020?
Romania's GDP per capita in purchasing power standards reached 72% of the EU average in 2020.
What is the total cumulative foreign direct investment (FDI) in Romania since 1989?
The total cumulative foreign direct investment (FDI) in Romania since 1989 exceeds $170 billion.
What is the contribution of Romania's industrial sector to the GDP in the first half of 2018?
The industrial sector contributed 33.6% to Romania's GDP in the first half of 2018.
What are Romania's top exports?
Romania's top exports include vehicles, machinery, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, rubber, and plastics.
What is the current unemployment rate in Romania as of 2024?
The current unemployment rate in Romania as of 2024 is 5.4%.
What is the average gross salary in Romania as of January 2024?
The average gross salary in Romania as of January 2024 is RON 7,405 / €1,490 / $1,609 monthly.
