Relatively low wages and an educated workforce make Romania an attractive destination for foreign direct investment. The country’s EU membership has deepened trade and capital market integration, fostering continued convergence with other members of the bloc. A flexible currency and limited private sector indebtedness provides some space for Romania’s policymakers to stimulate growth.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective in Romania. Clients also benefit from in-depth analysis on 22 of the country’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Romania.

Country Risk

Romania Country Risk

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Core Views:

  • Romania's economic growth story will gather further steam in 2015 and 2016, with the country set to remain a regional real GDP growth outperformer.

  • This will be underpinned by increasingly strong private consumption, on top of steady export growth to key eurozone trading partners.

  • An increasingly expansionary fiscal policy will lead to modest deterioration in the country's credit risk profile, but will not pose systemic risks to financial stability.

  • Planned and already implemented VAT cuts will keep the country in deflationary territory over the coming months, but the central bank will resist any temptation to cut the policy rate.

  • The ruling Social Democratic Union (PSD)-led coalition will remain on the back foot, due to the rising popularity...

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Romania Operational Risk Coverage (9)

Romania Operational Risk

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BMI View: Romania presents investors with a range of potential operational risks, not the least of which is the endemic corruption in the political and judicial system which undermines the operating environment and dampens investor confidence. The lack of skilled labour is another cause for concern, particularly in light of declining secondary and tertiary education enrolment and attainment rates, and Romania's ongoing 'brain drain' is resulting in the loss of the most qualified candidates to competing markets. Somewhat offsetting these risks are the high level of openness to foreign investment, healthy economic growth and lack of trade barriers. As such, Romania ranks 12th in Emerging Europe and sits 58th globally with a score of 59.3 out...

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Romania Crime & Security

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B MI View: Investors in Romania benefit from strong political stability and minimal risks of violent activity. Peaceful relations with neighbouring states and membership of international organisations mitigate the risks posed by interstate conflict. The terror threat is also low, as there are no international groups known to be operating in the country. Moreover, given the lack of great power status, Romania is at low risk of becoming a target for a terrorist attack. One of the biggest risks posed to foreign businesses is from financial crime and fraud, with criminal gangs gaining traction in the formal economy. Taking these factors into consideration, we award Romania a score of 62.2 out of 100 in BMI's Crime and Security Index, which places the country 12 out of 31 Emerging Europe states.

Investors in Romania benefit from a stable and secure environment, with...

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Romania Labour Market

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BMI View: Romania does present investors with a large potential labour pool, which benefits from strong literacy rates and a large number of tertiary education graduates in key disciplines as well as a low minimum wage and high degree of labour flexibility. There are however significant concerns relating to the declining enrolment rate at all levels of education, and the disparity in the quality of education on offer in different regions of the country. This is compounded by limited female labour force participation and a very small migrant workforce. As a result, Romania is a regional underperformer on the BMI Labour Risks Index, with a score of 55.6 out of 100 placing the country 16th out of 31 states in Emerging Europe, behind Azerbaijan and shortly ahead of Lithuania.

...

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Romania Logistics

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BMI View: The logistics network in Romania presents potential investors with both challenges and benefits. While the country has strong regional and international trade connectivity via extensive road, rail and maritime links, the quality of the transport network suffers from underinvestment and can be the cause of delays. Similarly, while there are few bureaucratic hurdles for importing and exporting goods, this is offset by the relatively high cost of transport freight to and from the country. And while Romania enjoys security of fuel supplies, the costs of said fuel is again higher than the regional average. As such, Romania has a middling score of 57.2 out of 100 on the BMI Logistics Risk Index, placing the country 13th out of 31 Emerging Europe states, and 65th out of 201 states globally.

Romania has a strong export sector, which is placing...

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Romania Trade & Investment

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BMI View: Membership of the EU helps to ensure Romania offers an open economy with very few restrictions on foreign investment or the movement of goods, making it an attractive potential investment destination. There are, however, ongoing concerns surrounding corruption which is pervasive in the judicial and governmental systems and inadequate intellectual property protection is also a risk as Romania struggles to enforce existing legislation. These factors dampen Romania's overall performance on the BMI Trade and Investment Risk Index, and the country sits in 11th place out of 31 countries in Emerging Europe with a score of 62.3 out of 100.

Romania's performance in terms of investment and trade openness is positive - as a member of the EU, Romania benefits from tariff free trade across...

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Romania Industry Coverage (22)

Agribusiness

Romania Agribusiness

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BMI View: We still believe the Romanian grain sector has the highest growth potential owing to its competitiveness and its exposure to the Middle East and Asia. We believe that the country's poultry sector will outperform the rest of the livestock sector, owing to strong demand from Romania's population. The country's dairy and sugar industries are likely to moderately benefit from the abolition of the EU's production quotas in milk (from spring 2015) and sugar (from September 2017).

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)
...

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Autos

Romania Autos

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We forecast a 14.9% increase in vehicle sales in 2015 on the back of a recovery in the passenger car and commercial vehicle (CV) segments.

In 2014, passenger car sales increased 2.1%, to 70,217 units, Growing consumer sentiment started translating into an uptick in big-ticket purchases, such as new autos, following a period of reticence from consumers; in previous years, modest improvements in GDP growth had not translated into improved car sales, and the market declined as people delayed car purchases. From 2015 over the remainder of our five year forecast period to 2019, we expect to see robust growth in the autos market, as improvements private consumption translate into improved autos sales as consumer sentiment for big-ticket purchases increases.

BMI maintains a bearish outlook for business and manufacturing growth in Romania. Weakening access to credit for many businesses has led to a...

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Commercial Banking

Romania Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Defence & Security

Romania Defence & Security

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BMI View: Romania historically has under-spent on its defence requirements. The country has a well-established defence industry, and significantly faces regional security concerns which will encourage future defence spending trends. At the industrial level, its companies are working to establish relationships and to deepen cooperation regarding defence design, development and production. Meanwhile, the country's defence relationship with the United States is expanding. This is the result of the country's important role in the NATO European Phased Adaptive Approach ballistic missile defence initiative.

Although having an important position as a Warsaw Pact member during the years of the Cold War, Romania has worked hard to develop an indigenous defence industry, and a high level of defence self-sufficiency to this end. In particular, the country has established a strong track...

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Food & Drink

Romania Food & Drink

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BMI View: Romania's food and drink sector will be a regional outperformer over the next five years, driven by an improving labour market, real wage growth and low levels of inflation. A VAT cut on food products from June 2015 will provide an additional boost to the sector. The food retail sector will also benefit from this positive outlook, with further investment to come as the sector consolidates.

Headline Industry Data (local currency)

  • Food consumption growth year-on-year (y-o-y) in 2015: +5.2%; compound annual growth rate (CAGR) 2014-2019: +5.6%.

  • Per capita food consumption growth (y-o-y) in 2015: +5.5%; CAGR 2014-2019: +5.9%.

  • Alcoholic drinks value sales growth (y-o-y) in 2015: +3.5%; CAGR 2014-2019: +6.0%.

  • Soft drinks...

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Freight Transport

Romania Freight Transport

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Freight volumes in Romania will increase strongly in 2015, on the back of strong domestic economic growth and an improving regional picture, particularly within Germany and the eurozone. We forecast real GDP growth of 3.6% in Romania in both 2015 and 2016, which will drive total trade within the country. Air freight growth will outperform both road and rail, though will remain a minimal transportation service within the general freight sector. Road volumes will continue to dominate, and investment from the Romanian government and the EU will ensure that this remains the case over the next few decades.

The improving economic situation in Romania and the eurozone will lead to stronger trade activity over 2015 and beyond. We forecast real GDP growth of 3.6% in Romania in both 2015 and 2016, and we hold a more positive outlook regarding eurozone economic growth following an improving domestic consumption picture across many countries and...

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Information Technology

Romania Information Technology

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BMI View: Expansionary government fiscal policy will contribute to strong economic growth over the course of 2015, with benefits for the development of the IT industry. Tax cuts in particular will boost household spending, combined with rising employment and average wages, particularly in the manufacturing and ICT sectors. We estimate a five-year CAGR in IT spending of 7.2% between 2015-2019 in local currency terms, one of the highest rates in the region. Many international companies (particularly hardware vendors) are positioning themselves to capitalise on this surge, setting up local offices and units in Romania, as devices penetration shows room for growth. Rural communities in particular will reap the benefits of EU funding, with...

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Infrastructure

Romania Infrastructure

BMI View:

BMI View: The outlook for Romania's construction sector over the coming five years is more positive than the previous; we now forecast real growth of 3.9% y-o-y in 2015, followed by 4.2% in 2016. The acceleration in growth comes on the back of a more expansionary government expenditure and funding from the EU. However, after working hard to reduce the budget deficit, this expansion of fiscal spending will threaten Romania's fiscal position and damage the country's ability to get support from the IMF and increase the cost of future borrowing. This sees our forecasts for growth in the sector to slow from 2020.

Key Trends And Developments

  • The transport masterplan was published in...

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Insurance

Romania Insurance

BMI View:

BMI View : Over H115, nothing has happened to change our view that premiums should grow steadily over the coming years in both Romania's life and non-life segments. Prices in the important motor vehicle sub-sector of the non-life segment may have stabilised while volumes have been growing. In the life segment, the continuation of strong sales of unit-linked products has surprised us. We remain of the view that growth in life premiums (including renewal premiums) will be fairly slow over the course of the forecast period. This is because of structural constraints such as the low incomes of some households and preferences for other channels of organised savings. We would not be surprised if...

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Medical Devices

Romania Medical Devices

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BMI Industry View: We project the Romanian medical device market to grow by a CAGR of 2.9% over the 2013-2018 period, in line with economic growth and rising health expenditure. The scarcity of high-tech equipment and the acute need for renovation within hospitals keeps the demand for medical devices high. The market is expected to remain heavily reliant on imports as the domestic industry mainly produces outdated equipment that can only compete with foreign products in terms of price.

Headline Industry Forecasts

  • In 2013, the Romanian medical device market was...

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Metals

Romania Metals

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BMI View:  Romania's metals sector will continue to see modest growth over the coming years as it slowly recovers from the global downturn. This is primarily the case for steel, the largest sub-component of Romania's metals sector. With modest growth in both autos production and the country's construction sector, we expect modest growth in steel output over the next five years. In addition, with our expectation for steel prices to head broadly lower over the coming years, we see few sources of encouragement for the sector. Therefore, whilst we forecast modest growth in output, it will remain far off 2007 highs. 

No Return To Highs
Romania - Steel Output
...

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Mining

Romania Mining

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BMI View: The expansion of Romania's mining sector will be sluggish over the next few years as a declining coal industry and local opposition to mining projects limits potential growth in minerals output. Good news on the horizon is Eldorado Gold's Certej gold mine, which is set to come online from 2016.

Romania has significant mineral reserves with the country boasting some of the largest coal and gold deposits in Europe. Production levels are among the highest in Central and Eastern Europe (CEE), however, growth is slowing due to a combination of factors including falling coal grades, compliance EU carbon emissions targets and opposition to mining activity at both a community and government level.

In particular the production of Brown coal, also known as lignite, is set to decrease gradually through our forecast period to end-2019 as EU CO2 emissions legislation forces the...

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Oil & Gas

Romania Oil & Gas

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BMI View: Field redevelopments will prop up oil and gas production to 2017 with longer-term growth driven by Black Sea projects. The refining sector continues to modernise but downsize in order to remain competitive.

...
Headline Forecasts (Romania 2013-2019)
2013 2014e 2015f 2016f 2017f

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Petrochemicals

Romania Petrochemicals

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Although 2014 ended on a downturn, BMI believes the petrochemicals market should be robust enough to lift output in 2015. As a net hydrocarbons importer, weaker oil prices are helping Romania's downstream sectors. Even the financially troubled polymer producer Oltchim could see a buyer by the end of the year.

Weaker oil prices have helped Romania's downstream sectors with refining margins improving as a result, reversing the situation of regular quarterly losses. This is helping drive down the cost of naphtha feedstock used in the petrochemicals industry, with Oltchim reporting an operating profit for the first time in years in H115. This is prompting renewed interest in the financially troubled polymers producer, which has suffered as a result of a cut in feedstock supply from the Arpechim refinery.

In January-April 2015, chemicals output declined by 0.8%...

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Pharmaceuticals & Healthcare

Romania Pharmaceuticals & Healthcare

BMI View:

BMI View: A strong consumer story and macroeconomic outlook will support growth in pharmaceutical sales over 2015. However, local regulatory factors such as pricing and reimbursement decisions and industry taxes will moderate growth and limit the country's attractiveness to multinational drugmakers.

Headline Expenditure Projections

  • Pharmaceuticals: RON14.19bn (USD4.28bn) in 2014 to RON14.94bn (USD3.67bn) in 2015; +5.3% in local currency terms and -14.3% in US dollar terms. Forecast upgraded from Q315.

  • Healthcare: RON34.72bn (USD10.48bn) in 2014 to RON36.37bn (USD8.93bn) in 2015; +4.7% in local currency terms and -14.8% in US dollar terms. Forecast unchanged from Q315.

    ...

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Power

Romania Power

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BMI View: This quarter we maintain our view that nuclear power will be key to driving Romania's energy sector, given the prospect of massive Chinese and Canadian investment in the second half of the next decade. Gas will also play an important role, with our O&G analysts forecasting Romania to become a net gas exporter from 2020 onwards. This will fuel an increase in gas-power electricity generation, which according to our forecasts will reach 10.39TWh in 20...

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Real Estate

Romania Real Estate

BMI View:

BMI View: With growing public confidence in the current parliamentary administration and rising household spending, we believe that Romania's commercial real estate sector is set to experience buoyant growth, rendering it an attractive investment opportunity. However, companies should remain vigilant as to the situation regarding the stagnation in rental rates as a result of high vacancies.

The Romanian economy looks to outperform its CEE peers over the 2015 and 2016 period as improved government fiscal policy and robust consumer spending drive economic growth further than peripheral EU emerging economies. Due to the favorable conditions witnessed, we have revised our GDP forecast from 3.4% to 3.6% for 2015 and 2016, exceeding prior prospects and revealing the growing potential for the Romanian economy. Looking ahead in the forecast period, we expect to witness increasing public...

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Retail

Romania Retail

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BMI View: Following its IMF bailout in 2009, Romania quickly found a way to recovery. Now the country has one of the best GDP and household income growth outlooks amongst the 28 EU countries. Romania's 21mn people market is among the largest and least saturated in the CEE. As the management of public finances improves and wages rise, the country will be among the most rewarding destinations for investments into the retail sector in the region.

Strong economic growth will allow Romania to continue catching up with the rest of the EU countries in 2015. We forecast the country's real GDP to expand by 3.6% this...

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Shipping

Romania Shipping

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BMI View: BMI is holding with its throughput forecasts for the Romanian port of Constantza for 2015 2016. We highlight however that the continued focus and investment at the port's dry bulk operations offers upside risk to these projections and over our medium term outlook.

We forecast growth in the port's total tonnage and container volumes will strengthen y-o-y in both 2015 and 2016. In 2015 we project the port's total tonnage volumes will expand by 3.7% to reach 57.7mn tonnes, a strengthening on the 0.9% y-o-y increase recorded in 2014. Container volumes at the port are estimated to expand by 3.8% in 2015 up from the 1.08% y-o-y increase recorded in 2014. 2016 will witness a further expansion in y-o-y growth in throughput at the port, with tonnage volumes projected to tick up by 4.1% and box volumes predicted to increase by 3.9%. This will see the port handle a...

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Telecommunications

Romania Telecommunications

BMI View:

BMI View: Despite lacklustre growth in the mobile market, BMI believes that Romania will be one of the best performers in the region when it comes to 3G/4G usage. BMI believes that the Romanian regulator is likely to make further spectrum available for the development of LTE services, which should boost 3G/4G uptake further. Romania's 3G/4G market will grow to be one of the most highly penetrated in Central and Emerging Europe by 2019 and this will lead to opportunities potential for value-added services. Consolidation has been the key trend in the wireline market over this same period, as the smaller, local players are acquired by the national operators.

Key Data

  • The Romanian mobile market supported 27.685mn...

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Tourism

Romania Tourism

BMI View:

BMI View: Romania's tourism sector has vast potential, yet lack of investment and strong competition from neighbouring countries mean that it remains underdeveloped. While tourist numbers have been growing over recent years - thanks, in part, to greater Economic integration - low standards of tourism infrastructure, poor quality accommodation and services, insufficient promotion of tourist products, and low levels of state investment in the sector have constrained its development. As these issues are being addressed, we expect to see steady growth in Romania's tourism sector and an increase in the number of tourist arrivals to the country, creating an attractive potential investment environment.

Romania has a harmonious and diverse landscape, which offers significant opportunity to investors in the tourism sector. The country...

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Water

Romania Water

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BMI View: Although open to investment and private sector operators, we view the Romanian water sector as a risky proposition with limited potential at present. This is due to the limited infrastructure and high non revenue rates on the one hand, and the seeming prevalence of corruption scandals which are preventing the country from gaining much needed EU funding. The continued cancellation of vital infrastructure projects over 2014 and 2015 will mean that there is limited development in the quality of the infrastructure or the water and sanitation services over our forecast period through to 2019.

The expected rise in water extraction, consumption and untreated discharge stems from an increase in the number of households that have access to the water network as well as the expansion of the gold and coal mining sectors and the construction industry. These water-intensive industries, along with the...

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