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

BMI View:

Core Views:

  • Romania will be an economic growth outperformer in Central and Eastern Europe (CEE) in 2016, and the second fastest growing EU economy (behind Ireland).

  • Growth will mainly driven by household spending, which stands to benefit from public sector wage increases, successive VAT cuts, and improving labour market conditions.

  • Romania's deflationary trend is supply-side in nature, and we expect the central bank to begin hiking rates in late 2016 or early 2017.

  • Romania's current account and trade deficits will widen, mainly due to robust domestic demand and imports.

  • Romania's anticorruption push will dent trust in politicians in 2016, but will be net positive for the country's longer-term macroeconomic and political development.

    ...

Romania Operational Risk Coverage (9)

Romania Operational Risk

BMI View:

BMI View: While the migrant crisis is affecting operational risk across many Emerging European states, Romania is less exposed to this risk than its neighbours, as it does not form the main part of the main migrant route from North Africa and the Middle East to mainland Europe. Financial crime, cybercrime and endemic corruption in the political and judicial system instead are the main concern for investors and continue to undermine the operating environment and dampen investor confidence in Romania. 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,...

Romania Crime & Security

BMI View:

BMI View: From a crime and security perspective, Romania performs competitively in comparison to many of its Emerging European peers. Business crime threats such as cybercrime, financial crime and organised criminal activities pose the largest risk to investors seeking to break in to Romania and businesses already operating in the country. Corruption endemic in the Romanian government, law enforcement and industry also hampers efforts being made to crackdown on these types of crimes. Security concerns related to petty or violent crime and international conflicts or terrorist attacks, however are minimal. Therefore, Romania scores a relatively...

Romania Labour Market

BMI View:

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.

...

Romania Logistics

BMI View:

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...

Romania Trade & Investment

BMI View:

BMI View: Romania's potential as a trade and investment destination is looking strong given its robust economic performance, tariff-free trade access to EU markets, strong FDI inflows, as well as low taxation rates and efficient taxation system. However, its overall score is hindered by examples of displays of policy discontinuity by the Romanian government in relation to foreign investors, as well as the problem of corruption which is still embedded within the Romanian government and legal system. Consequently, Romania is awarded a score of 62.7 out of 100 for the overall BMI Trade and Investment Risk Index , ranking the country eleventh out of 31 states in the Emerging European region.

Overall Trade And Investment Score Above Regional Average
Romania And Regional Average Trade And Investment...

Romania Industry Coverage (30)

Agribusiness

Romania Agribusiness

BMI View:

BMI View: We still believe the Romanian grain sector has high growth potential owing to its competitiveness and its exposure to the Middle East and Asia. We believe that the country's poultry sub-sector will outperform the rest of the livestock sector, owing to strong demand from Romania's population. Milk production will see limited growth after the EU quota removal (March 2015), while the sugar sector will moderately benefit from the removal (2017).

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)
e/f = BMI estimate/...

Autos

Romania Autos

BMI View:

BMI View: 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.

Passenger Car and Light Commercial Vehicle Sales
(2013-2019)
f = BMI forecast. Source: APIA, BMI
Key Views
  • Growing consumer sentiment started translating into an uptick in big-ticket purchases, such as new autos, following a period of reticence from consumers.

...

Commercial Banking

Romania Commercial Banking

BMI View:

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

Defence & Security

Romania Defence & Security

BMI View:

BMI View: We expect Romania's defence budget to increase, both in absolute terms and as a share of GDP, in the next five years. This growth will be driven by the rising tensions in the Black Sea region, as Russia's increasingly aggressive stance in Ukraine and Moldova is prompting Romania to speed up the process of modernisation of its armed forces. Modernisation will initially focus on ...

Food & Drink

Romania Food & Drink

BMI View:

BMI View: Romania's food and drink industry will outperform in the Central and Eastern Europe region. We forecast the food and drinks sector to grow at an average annual rate of 5.6% over 2014-2019. Planned and implemented VAT cuts on food and drinks will drive growth in the short term. Additionally, the mass grocery retail sector stands to gain from increased sales in food and beverages.

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: +3.4%; CAGR 2014-2019: +6.0%.

  • Soft drinks value sales growth (y-o-y) in 2015: +4....

Freight Transport

Romania Freight Transport

BMI View:

BMI View: In light of an improving economy in Romania and the eurozone recovery, trade activity will grow and private consumer demand will increase, providing opportunities for the freight sector in general. As exports increase in agricultural and heavy machinery, rail freight will see moderate growth in 2016, while road freight will have the strongest growth due to improved domestic conditions and investment in infrastructure.

The economic situation in Romania looks promising for our forecast period, benefiting from a recovery in Europe, increased employment and consumer purchasing power. Romania is set to be one of the fastest growing economies in south-eastern Europe, as it transitions towards a more balanced growth model driven by both private consumption and exports. Road freight will benefit from private consumption, while rail will benefit from exports.

The...

Romania Freight Transport

BMI View:

BMI View: We hold a highly positive outlook on Romanian household spending in 2016, which will drive demand for imports of consumer goods. This will provide a particular boost to road and air freight, and to container handling at the Black Sea port of Constanta.

We hold a positive view on Romania's trade prospects in 2016, forecasting real growth of 4.6% in total trade, followed by 4.5% in 2017. This will be driven chiefly by imports this year, as rising wages boost household spending power, and so we expect that air and road freight will outpace rail freight in terms of growth.

We hold a positive view on Romanian road freight in both the near and medium term. In the near term, growth will be driven by a constructive domestic household spending story, but both imports and exports will drive growth thereafter.

A positive outlook for the...

Information Technology

Romania Information Technology

BMI View:

BMI View: After a dip in IT market performance in Romania in 2015 we expect the market to exhibit stronger growth from 2016 to 2020. Device and solution penetration remains some way below the European average in Romania, and as the economy gathers momentum we believe vendors will be able to target relatively strong growth from convergence trends. The increasingly affluence of the middle class in Romania is highlighted, and we believe of greatest significance to personal device vendors, ie tablets, notebooks and hybrids. Meanwhile, the enterprise application market has considerable potential in ERP and CRM, and lower cost cloud providers could make gains in market share by tapping this underpenetrated opportunity. For the Romanian IT market as a whole we forecast a CAGR of 7.2% over 2016-2020 to almost RON7.7bn.

Latest Updates & Industry...

Infrastructure

Romania Infrastructure

BMI View:

BMI View: Romania's construction industry continues to prove one of the strongest markets in Central and Eastern Europe. The country's significant infrastructure deficit, with ageing transport and utilities networks creating delays and supply insecurity, means there is extensive demand for investment with a number of sectors targeted for expansion and modernisation. EU funding will support a range of projects, including major road and rail improvements under the Transport Master Plan, and public investment in some key gas pipeline and power plant projects is expected. Meanwhile demand for office and retail space is growing, as is the residential construction sector. Some risks remain, despite the growth potential, as there are ongoing concerns over transparency...

Insurance

Romania Insurance

BMI View:

BMI View: We hold a broadly positive outlook for Romania's insurance market. Although the life sector is in the early stages of development, with low rates of penetration and density, a gradual improvement in household income rates and employment rates will improve the affordability of various life products, while demographic trends will increase demand. The non-life sector is more established, though largely dominated by basic motor and property lines. Again, economic growth and the rise in average household income will support growth in the non-life sector. This growth could attract more foreign investment to the small Romanian market, though some regulatory uncertainty could deter potential investors.

...
Headline Insurance Forecasts (Romania 2013-2020)

Medical Devices

Romania Medical Devices

BMI View:

BMI Industry View: We project the Romanian medical device market to grow by a CAGR of 2.3% over the 2014-2019 period, supported by good economic growth and rising health expenditure. The scarcity of high-tech equipment, expanding private healthcare sector and 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 local currency terms, we expect the medical device market to grow by a projected 2014-2019 CAGR of 5.1%, which is slightly higher than the GDP forecast for the country, but market growth will be weaker in US dollar terms due to the projected depreciation of the Romanian leu against the...

Metals

Romania Metals

BMI View:

BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

...
Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Romania Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

...
Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Romania Metals

BMI View:

BMI View: Globally, iron ore prices will remain subdued due to weak demand growth in China and expanding output by major miners in Australia and Brazil. China will see output slow as the country's iron ore miners operate on the higher end of the global iron ore cost curve.

...
Global Iron Ore Forecast
2014 2015e 2016f 2017f 2018f

Romania Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

...
Global Nickel Forecasts
2013 2014 2015e

Romania Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Romania Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

Romania Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Romania Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

...
Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Romania Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

...
BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f

Mining

Romania Mining

BMI View:

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...

Oil & Gas

Romania Oil & Gas

BMI View:

BMI View: Investment into E&P is waning as major offshore drilling programmes have concluded, though field redevelopment projects continue over the short term. Refinery output demand and fuels demand have both improved on the back of lower oil prices.

Headline Forecasts (Romania 2014-2020)
2014 2015e 2016f ...

Petrochemicals

Romania Petrochemicals

BMI View:

Weaker oil prices have helped Romania's downstream sectors, with refining margins improving as a result and thereby reversing the situation of regular quarterly losses. This is helping drive down the cost of naphtha feedstock used in the Romanian petrochemicals industry, reviving the fortunes of the sector.

Plastic and rubber output grew 7.6% year-on-year (y-o-y) in the first 10 months of 2015, continuing the robust growth reported in 2014. On the downside, the chemicals sector reversed much of the growth seen in the previous year, falling 2.3% y-o-y. The troubled Romanian producer Oltchim is seeing a turnaround as a result of growth in polymers with a 31% increase in the valueof sales in 9M15 and a massive drop in losses.

Nevertheless, Romania has modest olefins capacities of 200,000 tonnes per annum (tpa) ethylene and 100,000tpa propylene, feeding capacities totalling 320,000tpa...

Pharmaceuticals & Healthcare

Romania Pharmaceuticals & Healthcare

BMI View:

BMI View: In line with Romania's economic outperformance in Europe, the country's pharmaceutical and healthcare markets will see strong growth given increased consumer spending power and higher healthcare contributions. However, aggressive drug pricing regulations, including the imminent joint drug procurement agreement with Bulgaria will limit revenue earning opportunities.

Headline Expenditure Projections

  • Pharmaceuticals: RON14.94bn (USD3.73bn) in 2015 to RON16.16bn (USD3.91bn) in 2016; 8.2% in local currency terms and 4.9% in US dollar terms.

  • Healthcare: RON33.84bn (USD8.45bn) in 2015 to RON34.95bn (USD8.46bn) in 2016; 3.3% in local currency terms and 0.2% in US dollar terms.

...

Power

Romania Power

BMI View:

BMI View: This quarter we have extended our forecasts to 2025. We continue to forecast electricity generation to remain relatively flat - registering annual average growth of 0.98% between 2016 and 2025. Coal will remain the biggest component of the power mix, but gas will gain share as coal capacity is taken offline to comply with tightening EU emissions targets, and Romania boosts domestic gas production from the Black Sea towards the end of our forecast period.

Headline Power Forecasts (Romania 2015-2021)...

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...

Retail

Romania Retail

BMI View:

BMI View: Despite being one of the poorest countries in the EU, Romania possesses one of the most promising income growth outlooks. As a result, we are anticipating robust growth in household spending throughout our forecast period and this will equate to considerable gains for retailers, particularly those in the MGR sector. While the country's population is on the decline, the market remains large and less saturated when compared other countries in the region.

...
Headline Household Spending
(2014-2020)
National Sources/BMI

Telecommunications

Romania Telecommunications

BMI View:

BMI View: Subscription-led growth is no longer possible in Romania's saturated mobile market. Network operators must deepen their relationships with existing customers, maximising monetisation opportunities. A paucity of high-speed wireline broadband networks was a key driver in 3G uptake, but premium service usage is low, souring investor appetites. Demand for converged services is growing, but Ancom's refusal to allow third parties to access cable operators' networks will impair further development.

Broadband Shortfall Drives...

Tourism

Romania Tourism

BMI View:

BMI View: The tourism sector in Romania is still relatively underdeveloped. Although a number of the major international hotel groups have some presence in the country, this largely consists of only one or two properties which are restricted to the main cities. The travel infrastructure, especially throughout the more rural areas of the country, is also in need of significant development. Looking forward, however, we forecast significant growth in the sector, driven by increasing numbers of tourist arrivals. The Romanian Tourism Authority is introducing a number of new flight links, with key markets both within and outside of Europe, and has recently been promoting the country strongly to the Russian market. The country may also benefit from its potential as an alternative for many tourists to Turkey and...

Water

Romania Water

BMI View:

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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