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Economy of Romania

 

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Romania, a leading trading power of the Balkans, is an acceding member of the European Union. Its capital, Bucharest, is the largest financial centre in the region. The Romanian economy is also characterized as a boom economy.

Economy of Romania

Currency

Romanian leu (RON)

Fiscal year

Calendar year

Trade organizations

WTO

Statistics

GDP ranking

45th (2004 est.) [1]

GDP (PPP)

$186.4 billion (2005 est.)

GDP growth

5.2% (2005 est.)

GDP per capita

$8,300 (2005 est.)

GDP by sector

agriculture (13.1%),
industry (33.7%),
services (53.2%) (2004 est.)

Inflation

8.9% (2005 est.)

Pop below
poverty line

28.9% (2002)

Labor force

9.66 million (2004 est.)

Labor force by occupation

agriculture (31.6%),
industry (30.7%),
services (37.7%) (2004)

Unemployment

5.5% (September 2005)

Main industries

textiles and footwear, light machinery and
auto assembly, mining, timber, construction, materials, metallurgy,
chemicals, food processing, petroleum refining

 

Trading Partners

Exports

€22.225 billion f.o.b. (2005 )

Main partners

Italy 15.5%, Germany 14.0%,
Turkey 7.9%, France 7.4%, UK 5.5%, Hungary 4.2%, US 4.1%, Austria 3.1%, Netherlands 2.1%, Bulgaria 2.7%,
Spain 2.4%,Greece 2.1% (2005)

Imports

€32.568 billion f.o.b. (2005 )

Main Partners

Italy 19.8%, Germany 14.0%,Russia 8.3%,
France 6.7%, Turkey 4.9%, China 4.1%,
Austria 3.7%, Hungary 3.3 %,
Kazakhstan 3.3%, Poland 2.9%, UK 2.9%, US 2.8% (2005)

Public finances

Public debt

$40.47 billion (23.6% of GDP) (2004 est.)

External debt

$24.59 billion (2004 est.)

Revenues

€ 31 billion (2006 est.)

Expenses

€ 32 billion (2006 est.)

Economic aid

NA

 

Historical Overview
After the collapse of the Soviet Bloc in 1989-91, Romania was left with an obsolete industrial base and a pattern of industrial capacity wholly unsuited to its needs. In February 1997, Romania embarked on a comprehensive macroeconomic stabilization and structural reform program, but reform subsequently has been a frustrating stop-and-go process. Restructuring programs include liquidating large energy-intensive industries and major agricultural and financial sector reforms. In 1999 Romania's economy contracted for a third straight year, by an estimated 4.8%. Romania reached an agreement with the International Monetary Fund in August for a $547 million loan, but release of the second tranche was postponed in October because of unresolved private sector lending requirements and differences over budgetary spending.

Romania is a country of considerable potential: rich agricultural lands; diverse energy sources (coal, oil, natural gas, hydro, and nuclear); a substantial, if aging, industrial base encompassing almost the full range of manufacturing activities; an intelligent, well trained work force; and opportunities for expanded development in tourism on the Black Sea and in the mountains.

Romania's economic strength
Romania's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing.
Romania is perhaps best known for its fashion houses; Agnes Toma, Steil, Steilmann and others.
Dacia Logan, Aro and Daewoo Romania are all Romanian goods. Romania is good at style and elegance, and that is what it needs to accentuate if it is to survive today's competitive world.
The Dacia Logan led sales in Central/Eastern Europe in the first six months, ahead of the Skoda Fabia, Skoda Octavia (up 20% on a new model introduction), Opel Astra and Renault Mégane. Logan was also the top selling car in the region in Q2 2005, ahead of Skoda Fabia and Octavia (up 14.4%), Renault Mégane and Suzuki Ignis (up 5.1%).
Several positive growth factors for Romania:

  • GDP: EUR 203,455.5 million and increasing
  •  75% of economic output from private sector
  •  Second largest consumer market in Central and Eastern Europe
  •  90% of companies expect sales and profits to grow over next 3 years
  •  70% of companies experienced profit growth in last 3 years

Profit margins in Romania are higher than in Poland and Hungary  GDP growth has been fastest in the CEE region in 2003-2004, and is expected to grow over next 2 years Growth factors include: private consumption, consumer credit, corporate investment and exports

 

GDP ($millions)

GDP (PPP) per capita

GDP (nominal) per capita

European Union

12.329.110

26.900

29.203

Romania

223.162

8.600

5.000

Bulgaria

67.381

8.200

4.900

Statistical indicators
Romania's GDP over 2005-2007 will go up by 10 billion euros per year, and will stand in 2007 at 96.138 billion euros.

Main indicators of the Romanian economy:

 

 

2003

2004

2005

2006

1.

GDP

€70 Bill

€77 Bill

€86 Bill

€91 Bill

2.

GDP (% real change pa)

+5,3%

+8,3%

+7%

+7% (est)

3.

GDP per head

€2.530

€2.600

€3.100

€9.000

4.

GDP per head (€ at PPP)

€7.700

€8.000

€8.500

€9.000

5.

Inflation

14%

9,2%

7%

5% (est)

6.

Minimum wage

285 L=€82

310 L=€89

330 L=€95

360 L=€105

7.

Médium gross wage

765 L=€220

870L=€250

995L=€95

1145L=€335

8.

Unemployment

6,4%

6,3%

6,1%

6% est

9.

FDI

€3,9 bill

€4,2 bill

€6 bill

€7,7 bill

10.

Foreign Exchange reserves (bn €)

€14 bill

€16 bill

€20 bill

€30 bill

Main indicators of the EXPORTS and IMPORTS of the Romanian economy:

 

 

2004

2005

2006 est

2007 est

2008 est

1.

Exports

€20 bill

€23 bill

€26 bill

€29 bill

€33 bill

2.

Importes

€28 bill

€31 bill

€36 bill

€39

€44 bill

3.

Average gross wage (RON)/€

950/275

1000/285

1100/315

1200/355

1350/385

The national budget is € 28.9 billion, which represents 31.2% from GDP estimated by RON 322.5 billion (€ 90.8 billion) according to the Prime-Minister Tariceanu.

Investment (gross fixed): 23.3% of GDP (2004 est.)

Household income or consumption by percentage share:

  • lowest 10%: 2.4%
  • highest 10%: 27.6% (2003)

Distribution of family income - Gini index: 28.8 (2003)

Agriculture - products: wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep.

Industrial production growth rate: 4% (2004 est.)

Electricity:

  • production: 56.53 TWh (2003)
  • consumption: 57.5 TWh (2003)
  • exports: 3.046 TWh (2003)
  • imports: 0.962 TWh (2003)

Electricity - production by source:

  • fossil fuel: 62.5%
  • hydro: 27.6%
  • other: 0% (2001)
  • nuclear: 9.9%

Oil:

  • production: 128,000 barrel/day (2004 est.)
  • consumption: 253,800 barrel/day (2003 est.)
  • exports: NA
  • imports: NA
  • proved reserves: 1.055 billion barrel (1 January 2002)

Natural gas:

  • production: 12.6 billion m³ (2003 est.)
  • consumption: 18.5 billion m³ (2003 est.)
  • exports: 0 m³ (2001 est.)
  • imports: 5.4 billion m³ (2001 est.)
  • proved reserves: 111.1 billion m³ (1 January 2002)

Current account balance: $-3.631 billion (2004 est.)

Exports - commodities: textiles and footwear, metals and metal products, machinery and equipment, minerals and fuels, chemicals, agricultural products.

Imports - commodities: machinery and equipment, fuels and minerals, chemicals, textile and products, basic metals, agricultural products

Reserves of foreign exchange & gold: $16.21 billion (2004)

Exchange rates: lei per US dollar - 33,260 (2004), 33,200.1 (2003), 33,055.4 (2002), 29,060.8 (2001), 21,708.7 (2000)

National Budget
National budget, about € 29 billions euro, represents about 31.2% of GDP of RON 322.5 billions (EURO 90.8 billions), declared the Prime-Minister Tariceanu. National budget is increasing rapidly about 6 billions EURO each year for the interval of time 2005-2009. About 2 billions EURO/year are spent for national defense.

National budget of Romania:


#

 

2005

2006

2007

2008

2009

1.

National Budget

25 Bn€

30 Bn€

36 Bn€ (est.)

45 Bn€ (est.)

59 Bn€(est.)

2.

Percentage of GDP%

29%

31 %

32%(est.)

33%(est.)

34 %(est.)