Strong growth offers lucrative opportunities
Attracting investors amid conditions of ever increasing competition remains one of the key challenges for the countries where the EBRD invests. To support these efforts, the Bank’s Director and Regional Head for Romania and Bulgaria, Matteo Patrone, chaired a panel at the “Trade Winds” conference in Bucharest, the largest annual business event in the region organised by the government of the United States of America (USA).
Mr Patrone delivered an upbeat assessment of the Romanian economy: “GDP data and growth rates make Romania the undisputed leader in the region,” he said. While the EBRD will publish its next forecast in early November, the Romanian government currently expects an expansion of the economy this year alone by 5.5 per cent.
At the same time, however, “room for convergence is still very much there”, as Mr Patrone also pointed out. On a wide scale of comparators – from GDP per capita to infrastructure development – significant catch-up potential persists.
For investors this is good news, because both the government and private individuals still have pent-up demand which will fuel further growth. While public debt is “under control”, the EBRD Director said, the need for investment “remains significant”.
The Bank’s current strategy for Romania focuses on supporting private businesses through broadening access to finance; developing commercialised infrastructure; and enhancing the competitiveness of the private sector.
One large remaining challenge for the country is, as Mr Patrone pointed out, the persistence of significant regional disparities that can be mitigated and reduced by the emergence of a 21st century infrastructure, in particular in the transport sector. For that to happen there is a need to change the growth model from consumption to investment driven, he said.
The EBRD Director was joined on the panel by Radu Florescu, CEO of Centrade-Cheil, a regional communications network; Georgios Sofianos, CEO of the healthcare distributor SofMedica; and Ionut Simon, country managing partner of the business consultancy PWC.
They stressed the positive outlook for Romania, but also underlined that the country needed to improve its attractiveness for investors: according to the Romanian Central Bank, while in 2016 the foreign direct investment (FDI) trend was positive, FDI to Romania fell 19 per cent year-on-year to an estimated €2.5 billion in the first eight months of 2017. One of the major reasons for this disappointing result was the continuing political instability, analysts agree.
The fact that greenfield investments stood at a meagre €78 million in 2016 (not dissimilar to previous years), means that Romania still must build its brand as a favourable investment destination but companies that have invested in the country tend to remain and increase their investments.
At the same conference, but on a different panel, Romania’s prime minister, Mihai Tudose, said that his country had “a lot to offer in areas such as agriculture, high-tech industry, IT and industrial production”. He underlined Romania’s commitment to Europe and the USA, saying: “We are proud of our partnership with the European Union and of the 20th anniversary of our strategic partnership with the USA.”
Trade Winds is the largest annual US government-organised trade mission designed to match US and foreign businesses to create business partnerships. The event in Bucharest, which ended on Tuesday, was the 10th conference in this series and the largest to date. The EBRD is a leading investor in Romania and to date has invested €7.5 billion in some 400 projects in the country. Mr Patrone has headed the Bank’s operations in Romania since June 2015.