In 2015, Romania’s economy is expected to expand by around 3.0%, according to forecasts of the World Bank, the European Bank for Reconstruction and Development, and the International Monetary Fund. Strong private consumption, backed by rising wages and low inflation, growing exports to the EU countries and a recovery in foreign investments will support the country’s economic expansion.
Romania's economic growth slowed down to 2.8% in 2014 but remained one of the sharpest in Southeast Europe (SEE). It came on the back of solid domestic consumption, increasing exports, mainly to the EU, and an uptrend in the industrial and services sectors. The key challenges facing the Romanian government are to maintain a steady growth pace without, however, jeopardizing the fiscal stability. The country should make further progress with structural reforms and cutting red tape, as well. Romania was also active on the debt market in 2014, selling some 40.6 billion lei (9.1 billion euro) and 928.7 million euro in government debt paper on the domestic market, and raising 2.0 billion U.S. dollars in 10-year and 30-year bonds on the U.S. market and 2.75 billion euro in ten-year bonds on international markets.
In terms of business environment, Romania climbed up to the 48th place out of 189 countries with a score of 70.22 points in the World Bank's Doing Business 2015 report. In the 2014 edition of the report, Romania ranked 50th with a score of 68.48 points. The country improved notably its standings in the Paying Taxes category, largely thanks to the launch of an electronic system for filing and paying taxes.
Romania made very good progress in terms of competitiveness, according to the Global Competitiveness Report 2014-2015 published by the World Economic Forum. The country ranked 59th out of 144 countries, after ending up 76th among 148 economies a year earlier. According to the report, the key factors limiting Romania's competitiveness are access to financing, tax rates, and inadequate supply of infrastructure.
Romanian emigrants supported the Romanian economy with 2.8 billion euro in remittances in 2014, according to data provided by the World Bank. Emigrants in Italy contributed the most, accounting for 29.3% of the total sum. Other major contributors were the Romanians living in Spain and Germany,
whose remittances accounted for 23.2% and 13.2% of the total, respectively.
The country's nominal gross domestic product (GDP) totalled 666.637 billion lei in current prices, growing by a real 2.8% in 2014, according to the National Institute of Statistics, INS.
Final consumption, which contributed 76.9% to GDP, increased by 4.6% in 2014. Gross capital formation went down by 3.6%, contributing 23.2% to the GDP. Exports increased by 8.1%, while imports rose slower, by 7.7%.
The gross value added (GVA) generated by the national economy increased by 2.6% in 2014 and totalled 589.029 billion lei. The industrial sector grew by 3.6% in terms of volume and its share in the GVA structure increased to 27.3% from 27.0% in 2013. The information and communication sector experienced the sharpest annual rise, of 8.2%. The agricultural sector was hit by floods but registered an annual increase of 1.5%, while narrowing its share in the GVA to 5.4% from 6.2%. Construction inched up by 0.3% and accounted for 7.1% of the GVA.
Industrial output went up by 6.1% in 2014. The manufacturing and the mining sectors grew by 7.5% and 1.0%, respectively, while the electricity, water and gas supply sector fell by 4.7%. Manufacturing of computer, electronic and optical products was the segment to report the highest annual production growth, of 53.9%, while the output of mining other than coal and lignite declined the most, by 5.8%.
Annual inflation slowed down to 0.8% in December 2014, from 1.6% a year earlier. Average annual inflation was 1.1%, while the EU-harmonized Consumer Price Index was up 1.4% on the year.
Unemployment in the country dropped to 6.8% of the total labour force in 2014 from 7.2% a year earlier, according to INS data. The employed population aged 15 years and above was 8.6 million in 2014, down by 6.8%. The unemployment rate among people aged between 15 and 24 went up to 24%, from 23.6% a year earlier.
Broad money (money aggregate M3) decreased by 8.2% and reached 261.4 billion lei in 2014, according to data provided by National Bank of Romania. The M2 money supply also grew, by 8.2%, to 261.1 billion lei. Money aggregate M1, or narrow money, jumped by 17.8% to 118.1 billion lei in 2014.
Loans to the non-government sector totalled 208 billion lei in December 2014, down by 3.5% year-on-year. Loans to non-financial corporations fell by 6.3% to 105.3 billion lei, household loans inched down 0.4% to 102.8 billion lei and home purchase loans climbed up by 14.6% to 46.8 billion lei, while consumer loans went down by 10.5%.
The country's gross external debt decreased to 94.3 billion euro in 2014, shrinking by 3.8%, or 3.77 billion euro, as compared to 2013. Longterm liabilities amounted to 63.5 billion euro, or 67.3% of the total debt, and short-term liabilities totalled 9.9 billion euro, equal to 10.5% of the total debt.
Foreign direct investment (FDI) dropped by 10.6% to 2.4 billion euro in 2014, according to data from the country's central bank. Of the total, equity stakes, including estimated net loss, amounted to 2.6 billion euro and intercompany lending stood at 155 million euro.
Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2015