Economic and Political Overview

flag Romania Romania: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

Following robust economic growth in 2022 (+4.7%) driven by private consumption and investments, activity is estimated to have decelerated to 1.8% in 2023 as high inflation and sluggish private credit growth constrained domestic demand, while external demand remained weak (EU Commission). Supported by the outlook for stronger private credit growth and ongoing rises in real disposable incomes, real GDP is projected to expand by 2.9% in 2024. Private consumption is anticipated to accelerate, while investment will continue to be the primary driver of GDP growth this year. The relaxation of monetary and financial conditions, coupled with increased external demand, is expected to drive real GDP growth to 3.2% in 2025 (EU Commission).

According to preliminary estimates from the Finance Ministry, the general government budget in Romania amounted to RON 89.94 billion (EUR 18.1 billion, in cash terms), equivalent to 5.68% of GDP in 2023. The country's public deficit rose by 11% year-on-year in nominal terms in 2023. However, due to the slightly faster growth of nominal GDP, there was a marginal improvement in the deficit-to-GDP ratio, which stood at 5.75% in 2022. The target set for 2024 is 4.9% of GDP. However, the promised wage hikes in the public sector, pension increases, and other expected public expenditures in the electoral context pose challenges to achieving this target. Public debt-to-GDP increased to 51% in 2023 from 50.5% one year earlier, and is expected to reach 55.2% by 2025 (IMF). In 2023, overall inflation decreased to 9.7% from 12% in 2022, primarily due to a notable slowdown in private credit growth amidst tight monetary conditions and reduced energy and food prices. However, inflation excluding energy and food saw a smaller decline and remained above headline inflation by the end of 2023, driven by robust price growth in services and non-food items. Average annual HICP inflation is forecasted at 5.8% in 2024 before moderating to 3.6% in 2025 (EU Commission).

An ageing population, the emigration of skilled labor, significant tax evasion, and insufficient health care may compromise Romania’s long-term growth and economic stability and are the economy's top vulnerabilities. Despite a relatively low level of unemployment (at 5.6% in 2023), Romania remains one of the poorest countries in Europe, with 34.4% of the population at risk of poverty or social exclusion (the highest ratio in the EU - data by Eurostat). The World Bank estimated the country’s GDP per capita (PPP) at USD 41,888 in 2022, still 22.7% below the EU average. A resilient labor market, coupled with two increases in minimum wages, helped mitigate the slowdown in real disposable incomes in 2023.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 301.27345.89369.97389.69413.28
GDP (Constant Prices, Annual % Change) 4.62.12.83.63.8
GDP per Capita (USD) 15,82118,17619,53020,69322,083
General Government Balance (in % of GDP) -5.8-5.6-5.6-6.3-6.4
General Government Gross Debt (in % of GDP) 50.550.753.056.259.1
Inflation Rate (%) 13.810.46.04.03.3
Unemployment Rate (% of the Labour Force) 5.65.65.65.45.2
Current Account (billions USD) -27.45-24.55-26.29-26.67-27.88
Current Account (in % of GDP) -9.1-7.1-7.1-6.8-6.7

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Romania has a labor force of 8.29 million people out of its 19.1 million population, though this number has been decreasing over the last decade due to the massive migration of Romanian workers to Western European countries. Agriculture represents around 4.5% of Romania's GDP and employs 18% of the country's active population (World Bank, latest data available). The main resources and agricultural production in Romania are cereals, sugar beets, and potatoes. However, production remains very low compared to the country's potential capacity (more than one-third of the land is arable). About 25% of the country is covered by forests (especially around Transylvania), and the logging industry is developing very fast. Romania has limited energy dependence thanks to coal, oil, gas, and uranium reserves. According to data from Eurostat, Romania is the seventh-biggest agricultural producer in the European Union. The turnover of Romanian agricultural companies was estimated close to RON 80 billion in 2023, based on the persistence of inflationary pressures and the estimated increase in annual crop production of 24% (KeysFin).

The industrial sector contributes 28.9% of the country's GDP and employs 33% of the active population. Thanks to inexpensive labor, its industry is diversified and competitive. Historically, manufacturing companies and the industrial sector represent the backbone of Romania's economy. For this reason, foreign direct investors are involved in heavy industry (metallurgy, steel), the manufacturing of vehicle parts, building and construction, petroleum refining, and textiles. According to figures from the World Bank, the manufacturing sector alone contributes 16% of GDP. Data from the national statistical office show that, in 2023, Romania witnessed a year-on-year decline of 4.9% in its unadjusted industrial production. Manufacturing output went down by 4.6%, that of electricity by 9.2%, while the mining sector recorded an increase of 1.9%.

Romania's economy is mainly centered on the services sector, which represents 57.6% of GDP and employs around 49% of the nation's workforce. Tourism, in particular, has been booming in recent years: the number of tourists visiting the country in 2023 rose 10.5% on the year, reaching 13.65 million, a level above those recorded before the pandemic (data INSEE). The technology sector has also seen consistent growth in recent years, due to the emergence of a high-qualified workforce whose cost is lower than the European average. Romania's ITC sector accounts for around 6.2% of GDP (Romanian Software Industry Association). The Romanian banking sector comprises 34 credit institutions: three banks with full or majority Romanian state-owned capital, four credit institutions with majority domestic, private capital, 19 banks with majority foreign capital and eight branches of foreign banks. About 68.2% of the Romanian banking sector’s assets are held by institutions with foreign capital (European Banking Federation). In 2023, Romania experienced a year-on-year increase of 1.9% in its retail sales on a seasonally and working-day unadjusted basis (INSEE).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 18.6 30.4 51.0
Value Added (in % of GDP) 4.5 28.8 57.5
Value Added (Annual % Change) -11.6 0.5 7.7

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Romanian New Leu (RON) - Average Annual Exchange Rate For 1 MUR 0.110.120.120.120.11

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
69,5/100
World Rank:
43
Regional Rank:
26

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.61/10
World Rank:
37/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Romania is open to foreign trade, which represents 93% of its GDP (World Bank, latest data available). The country mainly exports machinery and transport equipment (44.8% of total exports in 2023, mostly cars), manufactured goods classified mainly by raw materials (15.9%), miscellaneous manufactured articles (13.9%), and food and live animals (8.2%). Imports are led by machinery (36.8%); mineral products; chemical products; and base metals (data INSEE 2023).

The European Union is the main trading partner, accounting for 72.6% of total exports and 73.3% of imports in 2023. The leading countries for exports are Germany (19.8%), Italy (10.1%), Hungary (7.3%), France (6.0%), Bulgaria (3.9%); whereas imports are led by Germany (17.8%), Italy (8.2%), Bulgaria (7.1%), Hungary (6.5%), Poland (5.9% - data Comtrade 2022).

Romania’s foreign trade figures for 2022 published by WTO show that merchandise exports amounted to USD 96.7 billion (+10.6% year-on-year), while imports increased at a faster pace (+14%), to USD 132.5 billion. On the other hand, the country is a net exporter of commercial services, with exports totaling USD 38.9 billion against USD 25.5 billion in imports (+17.9% and +16.9%, respectively). Overall, Romania has a structurally negative trade balance, which has been widening in recent years: for 2022, it stood at around 6.9% of the country’s GDP (from 5.7% one year earlier - World Bank). According to preliminary figures from the national statistical office INSEE, in 2023, exports reached EUR 93.098 billion, indicating a modest increase of 1.3%, while imports totaled EUR 122.045 billion, showing a decline of 3.2% compared to the previous year, resulting in a decrease of 15.1% in the trade deficit compared to the previous year.

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 96,54492,132116,203132,468131,912
Exports of Goods (million USD) 76,87170,71887,38896,699100,612
Imports of Services (million USD) 20,61416,36421,80025,06728,440
Exports of Services (million USD) 30,30227,16532,91438,75842,797
Imports of Goods and Services (Annual % Change) 8.6-5.214.99.2n/a
Exports of Goods and Services (Annual % Change) 5.4-9.512.68.6n/a
Imports of Goods and Services (in % of GDP) 44.341.246.349.4n/a
Exports of Goods and Services (in % of GDP) 40.236.940.642.5n/a
Trade Balance (million USD) -19,960-21,676-27,291-33,923n/a
Trade Balance (Including Service) (million USD) -10,282-10,875-16,177-20,618n/a
Foreign Trade (in % of GDP) 84.578.187.092.0n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
Germany 19.8%
Hungary 7.3%
France 6.0%
Bulgaria 3.9%
Poland 3.8%
See More Countries 59.2%
Main Suppliers
(% of Imports)
2022
Germany 17.8%
Bulgaria 7.1%
Hungary 6.5%
Poland 5.9%
Türkiye 5.6%
See More Countries 57.1%

Source: Comtrade, Latest Available Data

 
 

Main Products

96.8 bn USD of products exported in 2022
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 6.9%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 6.4%
Insulated "incl. enamelled or anodised" wire,...Insulated "incl. enamelled or anodised" wire, cable "incl. coaxial cable" and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors 4.3%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 3.8%
Boards, panels, consoles, desks, cabinets and...Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, incl. those incorporating instruments or apparatus of chapter 90, and numerical control apparatus (excl. switching apparatus for line telephony or line telegraphy) 3.3%
See More Products 75.3%
132.7 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 4.4%
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 3.5%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 2.7%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.7%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 2.6%
See More Products 84.0%

Source: Comtrade, Latest Available Data

 
 

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Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Romanian Ministry Economy, Trade and Tourism
Statistical Office
National Institute of Romanian Statistics
Central Bank
National Bank of Romania
Stock Exchange
Bucharest Stock Exchange
Search Engines
Google
Romanian Voice
Economic Portals
Portal Info

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Political Outline

Current Political Leaders
President: Klaus IOHANNIS (since 21 December 2014 ; re-elected in the 2019 presidential election)
Prime Minister: Marcel CIOLACU (since 15 June 2023)
Next Election Dates
Presidential: November 2024
Chamber of Deputies and Senate: 2024
Main Political Parties
The main political parties in the country are:

- Social Democratic Party (PSD): centre-left
- National Liberal Party (PNL): centre-right, conservative, pro-European
- Hungarian Democratic Union of Romania (UDMR): supports minority Hungarian interests, liberal conservatism
- Alliance for the Unity of Romanians (AUR): right-wing, conservative, nationalist
- Save Romania Union (USR): syncretic, liberal
- Popular Movement Party (PMP): centre-right
Type of State
Semi-presidential republic.
Executive Power
The President is the Head of State and is elected by universal suffrage for a term of five years renewable once. The President is also the Commander in Chief of the army and is responsible for protecting the Constitution. Under the Romanian Constitution, the President acts as a mediator between the various centres of power in the country. The Prime Minister is appointed by the President (and is usually the leader of the majority party) for a term of four years. The Prime Minister is the Head of Government and holds executive power, including law enforcement and management of the affairs of the country. The Council of Ministers is appointed by the Prime Minister.
Legislative Power
The legislature in Romania is bicameral. The Parliament consists of: the Senate (the upper house) having 136 seats and the Chamber of Deputies (the lower house) having 330 seats. The members of both houses are elected by direct, popular vote on a proportional representation basis to serve four-year terms. The executive branch of the Government is directly or indirectly dependent on the support of the Parliament, often expressed through a vote of confidence. The Prime Minister does not have the power to dissolve the Parliament directly, but the President can do so after consultation with the political parties represented in the two houses. The people of Romania have considerable political rights.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
48/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
2/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
The summary of the EU’s economic response to the COVID-19 pandemic is available on the website of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) in Romania, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: May 2024