ECONOMICS
Romania Economic Indicators
Romania: a dynamic economy at the crossroads of opportunity and growth
Romania, a Southeast European nation of strategic importance, exemplifies how a country with rich natural resources, a skilled workforce, and a favourable geographic position can thrive in today’s interconnected global economy. As a gateway to both the European Union and broader international markets, with its blend of cost-competitive business conditions, robust infrastructure, and a commitment to innovation, Romania has positioned itself as an attractive hub for growth and development. Amid global economic shifts, the country’s focus on sustainability, technological advancement, and inclusive growth provides a solid foundation for its continued success and resilience on the international stage.
This page explores the current economic indicators of Romania, highlighting the sectors driving its economy and its challenges while providing insights into the nation’s ambitious outlook for 2024 and beyond.
Romania’s Economic Outlook: Balancing Challenges and Opportunities
In 2024, Romania’s economy is projected to grow by 1.4%, reflecting a marked deceleration from previous years due to sluggish external demand and high energy prices. However, the gradual recovery of exports, supported by EU-funded infrastructure projects and private investment, is expected to push growth to 2.5% in 2025 and 2.9% in 2026.
Key highlights of the 2024 economic forecast:
- GDP Growth: 1.4% in 2024, improving to 2.9% by 2026.
- Inflation: Expected to remain above 5% in 2024 but decline steadily toward the central bank’s target by 2026.
- Unemployment: Set to decline marginally from 5.5% in 2024 to 5.4% by 2026 due to resilient labour demand.
- Government Deficit: Projected at 8% of GDP in 2024, remaining elevated through 2026.
Public Debt: Forecast to rise from 52.2% of GDP in 2024 to close to 60% by 2026.
Source: Economic forecast for Romania, European Commission, November 2024.
Key Growth Drivers and Sectoral Contributions
Romania’s economic development benefits from its strategic location at the crossroads of the European Union, the CIS states, and the Middle East. Infrastructure projects, particularly those financed by the EU’s Recovery and Resilience Facility (RRF), have spurred investment in transport, IT, and energy. In 2023, public sector investment reached 5.9% of GDP, marking a significant boost to infrastructure.
The country is also recognized for its strong IT sector, which has positioned Romania as a digital hub in Central and Eastern Europe. With some of the fastest broadband speeds in Europe and a highly skilled, multilingual workforce, Romania has become a destination for technology and innovation-driven investments. Agriculture and industry remain vital, with more than 40% of the workforce employed in these sectors, contributing significantly to growth alongside IT and logistics.
Romania’s unemployment rate remained stable at 5.6% at the end of 2023, reflecting a tight labour market. Wage increases in both the public and private sectors have consistently outpaced inflation, boosting disposable incomes and supporting consumer demand. However, wage growth is expected to moderate from 2025 onwards due to easing inflationary pressures and reduced labour market tightness.
Inflation, which stood at nearly 10% in 2023, is projected to decline gradually to 5.5% in 2024, driven by falling energy and food prices. The central bank’s efforts to maintain inflation within the target range of 2.5% ±1 percentage points are anticipated to yield results only toward the end of 2026.
Foreign Direct Investment (FDI)
According to the latest report published by the National Bank of Romania, Romania continues to solidify its position as a key destination for foreign direct investment (FDI) in the European Union. In 2023, total net FDI flows reached EUR 6.748 billion, marking a 36.3% decrease from the record-breaking levels of the previous year. Despite this decline, which aligns with global trends influenced by economic uncertainty and geopolitical tensions, Romania remains an attractive hub for international investors, particularly in key sectors like industry, financial intermediation, insurance, and trade.
At the close of 2023, the total FDI position in Romania stood at EUR 118.231 billion, with 63% of investments directed towards greenfield enterprises. The remaining investments were channelled through mergers and acquisitions, reflecting Romania’s ongoing appeal for both new market entries and expansions of existing operations.
Source: Foreign Direct Investment in Romania in 2023, National Bank of Romania, page 6.
Key sectors dominated the FDI landscape in 2023. Industry attracted the highest share of net FDI flows, totalling EUR 2.485 billion, with manufacturing taking the lead at EUR 2.276 billion. Sub-sectors such as transport equipment, chemical products, and food and beverages were significant beneficiaries. Financial intermediation and insurance received EUR 1.740 billion, while trade accounted for EUR 1.650 billion. These three sectors alone constituted over 87% of total FDI flows for the year.
Source: Net FDI flows by main economic activity, Foreign Direct Investment in Romania in 2023, National Bank of Romania, page 11.
Romania’s geographical distribution of FDI highlights the central role of the Bucharest-Ilfov region, which attracted 63.8% of total investments, underscoring its status as the country’s economic and financial nucleus. Key investing countries also demonstrated consistent support for Romania’s growth. Germany emerged as the ultimate investing country with EUR 17.1 billion, while the Netherlands retained its position as the leading immediate investor with EUR 24.2 billion, accounting for 20.5% of the total FDI.
Foreign direct investment has significantly impacted Romania’s trade dynamics. In 2023, FDI enterprises expanded their exports by 1.9% to reach EUR 62 billion, while imports decreased by 1.3%, narrowing the trade deficit to EUR 13.5 billion. Service exports also grew strongly, increasing by 7.6% and contributing to a surplus of EUR 11.2 billion.
Despite these successes, challenges remain. For example, the construction and real estate sector experienced a downturn, with negative FDI flows amounting to EUR -24 million, primarily due to the repayment of debts by companies and reduced external financing needs. Nonetheless, the sector continues to benefit from positive revaluations of tangible fixed assets, signalling its long-term potential.
Romania’s FDI outlook remains promising, driven by its strategic location, skilled workforce, and integration into the European Union. However, as non-residents’ net income on FDI reached EUR 11.8 billion—75.8% higher than net FDI flows—Romania faces the challenge of identifying alternative sources of current account financing to mitigate its external debt pressures.
In conclusion, Romania’s foreign direct investment landscape in 2023 reflects a resilient and evolving economy. With ongoing structural reforms and a strong focus on attracting high-value investments, the country is well-positioned to maintain its appeal to international investors, driving sustainable growth and integration into global markets.
Pillars of Growth: Technology and Education in Romania
In recent years, Romania has emerged as a key player in Europe’s technology landscape, demonstrating significant growth fueled by strategic investments from both public and private sectors.
The European Investment Bank (EIB) has played a pivotal role, committing over €1 billion in 2022 alone to technology-oriented projects, including innovative powertrain technologies and electric vehicle research. Similarly, the International Finance Corporation (IFC) invested a record $546 million in 2023 to bolster Romania’s private sector and enhance the capabilities of its tech enterprises. These investments underline Romania’s commitment to positioning itself as a European technological innovation hub.
Multinational corporations like Microsoft, Oracle, and IBM have established R&D centres in Romania, leveraging the country’s highly skilled and competitively priced workforce. These hubs focus on cutting-edge advancements across artificial intelligence, cybersecurity, and cloud computing. Additionally, homegrown tech giants such as UiPath and Bitdefender have reinvested in the local ecosystem, supporting startups and promoting a culture of entrepreneurship.
Vibrant private-sector initiatives further bolster Romania’s tech sector. Venture capital funding reached €101 million in 2022, with startups like DRUID AI and Bunnyshell securing multimillion-euro funding rounds. Innovation hubs and accelerators, such as Techcelerator and Spherik Accelerator provide critical resources to early-stage companies, offering mentorship, funding, and networking opportunities to scale their operations.
Education stands as a cornerstone of Romania’s long-term growth strategy. Despite challenges, the sector has seen significant progress in recent years, supported by both public investment and private initiatives. However, government expenditure on education remains one of the lowest in Europe at 3.2% of GDP in 2022, compared to the EU average of 4.7%. This presents both a challenge and an opportunity for reform and improvement.
Source: Eurostat.
Romania has made strides in extending compulsory education, which now spans from age 4 to 19, above the OECD average. Early childhood education has seen increased enrollment, with 81% of children enrolled one year before primary school, though this figure still lags behind the OECD average of 96%. Similarly, tertiary education attainment has grown significantly, with 19% of adults holding a degree, four times higher than in previous generations.
Private and public collaboration plays a vital role in driving education forward. International companies like Google and Microsoft offer coding bootcamps and digital skills training, fostering a workforce ready for the demands of a technology-driven economy. Moreover, EdTech startups like Kinderpedia are modernising classrooms with innovative tools, supported by increasing private investments.
Challenges and Opportunities
Romania faces critical challenges in its education sector, including low government spending, regional disparities in enrollment, and a need to align curricula with labour market demands. Teacher shortages persist across several disciplines, highlighting the need for systemic reform. Yet, Romania’s commitment to fostering technological and educational advancements offers a promising pathway. Investments in digital skills, STEM education, and infrastructure upgrades are critical to equipping future generations for success in a rapidly evolving global economy.
Resources
Romania Economic Indicators
Romania, a Southeast European nation of strategic importance, exemplifies how a country with rich natural resources, a skilled workforce, and a favourable geographic position can thrive in today’s interconnected global economy. As a gateway to both the European Union and broader international markets, with its blend of cost-competitive business conditions, robust infrastructure, and a commitment to innovation, Romania has positioned itself as an attractive hub for growth and development. Amid global economic shifts, the country’s focus on sustainability, technological advancement, and inclusive growth provides a solid foundation for its continued success and resilience on the international stage.
Romania Regulatory Enviroment
As one of the most dynamic markets in Eastern Europe, Romania has become an increasingly attractive destination for investors looking to expand into the European market. With its strategic location, business-friendly environment, and a growing skilled workforce, Romania provides significant opportunities for both startups and established companies. From competitive tax systems to robust investment incentives, Romania combines a mix of modern policies and infrastructure to ensure businesses thrive. Below we explore what makes Romania a standout destination for foreign investors, including the ease of doing business, tax regimes, and other key factors that contribute to the country’s growing economic appeal.
