Romania overview

Cityscape

In Romania we focus on:

Promoting stability and expanding products in the financial sector. Given the continuing global economic and financial uncertainty, the stability of the financial sector is still at risk. Further development is also required in the areas of leasing and insurance and local capital markets.

Strengthening infrastructure through improved efficiency and greater private sector involvement. It is necessary to develop the national infrastructure sector, especially roads, and, where appropriate, to introduce private sector investment via concessions /PPPs and the privatisation of transport operators. In many infrastructure operations (water, waste, roads, rail, district heating, etc.) there is a need for improved operating efficiency and service levels, and less dependence on public subsidies and state financing.

Restructuring the power sector and increasing energy efficiency and sustainability. A large part of Romania’s energy sector is still state-owned and needs to be restructured and/or privatised to encourage investment and to promote efficiency. Despite improvements in recent years, Romania is still an energy-intensive economy and needs to make further progress in the transition to an efficient, low carbon economy.

As well as being a country where the EBRD works, Romania is also an EBRD donor. In 2015 Romania became a donor to the Eastern Europe Energy Efficiency and Environment Partnership Fund, contributing €40,000 for projects in Moldova.

The EBRD’s latest Romania strategy was adopted on 30 September 2015

Current EBRD forecast for Romania’s Real GDP Growth in 2017 5.3%

Current EBRD forecast for Romania’s Real GDP Growth in 2018 4.2%

Romania’s economy grew by 4.6 per cent in 2016 and by 5.8 per cent in the first half of 2017, driven by strong domestic demand. Private consumption surged on the back of higher disposable income (boosted by cuts in VAT and a rise in wages), improvements in the labour market and a strongly pro-cyclical fiscal policy. Consumption will continue to drive growth in 2017 and 2018, supported by a further increase in minimum and public sector wages, which formed part of the governing PSD’s election promise.

The latter will mean that government spending is likely to remain elevated, with a risk that the 3 per cent of GDP deficit limit under the fiscal compact will be breached in 2017. While overall investment has been weak, public investment will be boosted by the increased absorption of EU funds. Meanwhile, better economic prospects of Romania’s trading partners mean that exports will offset part of the growing import bill resulting from higher domestic consumption. GDP growth of around 5.3 per cent is expected in 2017, moderating to 4.2 per cent in 2018.

Romania in the EBRD’s 2017-18 Transition Report

Romania in the latest BEEPS survey