Economic Overview

Since 2000, the Romanian Government has implemented macroeconomic policies that have marshalled strong economic growth. A disciplined fiscal policy complimenting a tight monetary policy was conducted in conjunction with major advances in structural reforms. Inflation and interest rates have declined steadily, the fiscal deficit has been brought under control, foreign exchange reserves have increased to historic highs and external debt has been held at manageable levels.

The improved financial discipline in the enterprise sector and tighter control of public finances have resulted in six consecutive years of robust gross domestic product (GDP) growth. According to the Romanian Statistics Office the country saw GDP growth of 7.7 per cent in 2006, the highest growth rate for a decade and among the top rates in Europe.

Investment Climate

Romania is a country with considerable potential, rich with agricultural lands and diverse energy sources (coal, oil, natural gas, hydro and nuclear). Romania presents a market place of 21.6 million consumers.

Romania has succeeded in increasing the amount of foreign direct investment (FDI) inflow it receives in the last few years. In 2006 it reached a record high of 9.1 billion Euro, the highest amount in the region after Poland.

To gain membership to the EU, Romania has worked to create a legal framework consistent with a market economy. The substantial body of legislation and regulation provides national treatment for foreign investors, guarantees them free access to domestic markets and allows foreign investors to participate in privatisations.

Opportunities

One of the fastest growing economies in Europe, Romania is a sizeable market with real growth potential. Opportunities exist in most of sectors; however, it is also a very competitive market. Whilst UK firms appear slow to explore or enter the market, foreign firms have invested and more will continue to do so.

The construction sector remains one of the most dynamic in the Romanian economy. The growth of the market is impressive especially in terms of real value, rather than volume, because of the rising cost of construction materials.

An important development is expected for residential and industrial buildings. Romania has 374 houses (dwellings) per 1,000 inhabitants, compared with 468 houses per 1,000 inhabitants in the EU. In terms of liveable area per capita (14.2 square metres), Romania is far from the EU average. Around 4,500 housing units will be developed in Bucharest during the upcoming years.

Romania will benefit from EU Structural Funds, which will in particular be targeted towards improving both internal transport links and those with the rest of the EU.

UK Trading Relationship

Romania is the UK's fourth largest export market in the region. However exports took a tumble in 2006 to £606 million. In contrast imports continued to increase, reaching £827 million. The UK is the one of the leading foreign investors in Romania with close to €3.5 billion of direct investment.