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
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Due to the 2009 financial crisis, Romania endured an economic slowdown, especially in the automobile sector, which is subject to foreign demand. Financial difficulties pushed the country to seek financial help from the IMF, the European Commission and the World Bank. More recently, the Romanian economy was among the fastest-growing in the EU; nevertheless, the global crisis brought by the COVID-19 pandemic caused a drop of GDP in 2020, from which the country recovered fast in 2021 when growth was estimated at 7% by the IMF. Romania’s economy reached its pre-pandemic level already in the first half of the year, as growth was underpinned by strong domestic demand. The IMF forecast growth at 4.8% this year and 3.8% in 2023, with investment expected to remain strong, supported by the Recovery and Resilience Facility and other EU Funds. Foreign trade is forecast to benefit from easing of supply bottlenecks, but is not expected to contribute to growth.
Concerning public finances, the country experienced an expansionary trend in recent years, with a government deficit averaging above 4%, largely driven by pension increases. This trend was reinforced by the impact of the COVID-19 crisis, with the deficit estimated at 5.3% in 2021 (IMF), despite higher-than-expected tax revenues. The general government deficit is set to remain around 5.4% of GDP over the forecast horizon. Conversely, the expansionary fiscal policy prompted an increase in the debt-to-GDP ratio, which reached 51.1% in 2021 (from a pre-pandemic level of 36.8%). Despite the economic recovery, the ratio should follow an upward trend this year (52.9%) and in 2023 (54.9% - IMF). The steep and continuous increase in energy prices drove average inflation to 4.3% in 2021, with a forecast of 3.4% for 2022 (although the EU Commission sees the ratio rising to 5.3%).
An ageing population, the emigration of skilled labour, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package may compromise Romania’s long-term growth and economic stability and are the economy's top vulnerabilities. With 35.8% of the population at risk of poverty or social exclusion, Romania remains one of the poorest countries in Europe (data by Eurostat). Furthermore, the COVID-19 crisis led to a rise in unemployment, estimated at 4.9% in 2021. Average wage growth remained solid at 7% (OECD) and a tight labour market is expected to push wages up over the forecast horizon.
| Main Indicators | 2020 | 2021 (e) | 2022 (e) | 2023 (e) | 2024 (e) |
|---|---|---|---|---|---|
| GDP (billions USD) | 249.51 | 284.09 | 299.89 | 311.55 | 337.21 |
| GDP (Constant Prices, Annual % Change) | -3.7 | 5.9 | 4.8 | 3.1 | 3.8 |
| GDP per Capita (USD) | 12 | 14 | 15 | 16 | 17 |
| General Government Balance (in % of GDP) | -5.3 | -7.6 | -5.8 | -4.7 | -4.9 |
| General Government Gross Debt (in % of GDP) | 49.6 | 51.4 | 49.7 | 51.7 | 52.9 |
| Inflation Rate (%) | 2.6 | 5.0 | 13.3 | 11.0 | 3.6 |
| Unemployment Rate (% of the Labour Force) | 5.0 | 5.6 | 5.5 | 5.5 | 5.4 |
| Current Account (billions USD) | -12.44 | -19.83 | -25.31 | -24.96 | -22.57 |
| Current Account (in % of GDP) | -5.0 | -7.0 | -8.4 | -8.0 | -6.7 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
Romania has a labour force of 8.89 million people out of its 19.3 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 3.8% of Romania's GDP and employs 21.2% 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 in comparison with the country's potential capacity (more than one-third of the land is arable). About 25% of the country is covered by forest (especially around Transylvania), and the logging industry is developing very fast. Romania has a limited energy dependence thanks to coal, oil, gas and uranium reserves. According to data from Eurostat, Romania became the seventh-biggest agricultural producer in the European Union; nevertheless, the impact of the COVID-19 pandemic was heavy, with the sector recording the biggest decline in the EU in 2020 (-11.3.% -Eurostat).
The industrial sector contributes to 26.4% of the country's GDP and employs 30.1% of the active population. Thanks to inexpensive labour, 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 by the World Bank, the manufacturing sector alone contributes 15.7% of GDP. Data from the national statistical office show that in the first eleven months of 2021 industrial production increased by 7.5% year-on-year; nevertheless, it was still 3.4% lower than in 2019.
Romania's economy is mainly centred on the services sector, which represents 59% of the GDP and employs around 48.7% of the nation's workforce. Tourism, in particular, has been booming in recent years, reaching an all-time high of 13.26 million in 2019. After an unprecedented drop in tourism arrivals in 2020 due to the COVID-19 global restrictions, in 2021 the number of tourists increased by 46% y-o-y, although it was still 29.3% lower than before the pandemic (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% of GDP (Romanian Software Industry Association).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 21.2 | 30.1 | 48.7 |
| Value Added (in % of GDP) | 3.8 | 26.4 | 59.0 |
| Value Added (Annual % Change) | -16.2 | -5.5 | 6.0 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Romanian New Leu (RON) - Average Annual Exchange Rate For 1 MUR | 0.11 | 0.12 | 0.12 | 0.12 | 0.11 |
Source: World Bank - Latest available data.
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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.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
Romania is open to foreign trade, which represents 79% of its GDP (World Bank, latest data available). The country mainly exports motor cars (7.6%) and their parts (8.7%), as well as insulated electric conductors (5.1%); while imports are led by parts for motor vehicles (4.2%), medicaments (3.6%), motor cars (2.5%), and crude oil (2.5% - Comtrade).
The European Union is the main trading partner, especially Germany (22.8%), Italy (10.7%), France (6.7%) and Hungary (5%). Imports follow a similar path, with Germany (20.8%) being the main destination for Romania’s exports, followed by Italy (8.9%), Hungary (7.3%), Poland and China (6.2% each).
Romania’s foreign trade figures for 2020 published by WTO show that merchandise exports amounted to USD 70.7 billion (-8% year-on-year), while imports decreased at a slower pace (-4.5%), to USD 92.1 billion. On the other hand, the country is a net exporter of commercial services, with exports totalling USD 27 billion against USD 16.2 billion of imports (-10.6% and -20.7%, respectively). Overall, Romania has a structurally negative trade balance, which has been widening in recent years: for 2020, it stood at around 4.4% of the country’s GDP (World Bank). According to figures from the national statistical office INSEE, in 2021 exports of goods totalled RON 367,546 million (+22.2%) against RON 484,186 million of imports (+24.3 y-o-y). Intra-EU trade accounted for 72.4% of both imports and exports.
| Foreign Trade Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 74,539 | 85,486 | 97,747 | 96,544 | 92,124 |
| Exports of Goods (million USD) | 63,520 | 70,761 | 79,660 | 76,867 | 70,721 |
| Imports of Services (million USD) | 11,399 | 14,023 | 18,206 | 20,522 | 16,275 |
| Exports of Services (million USD) | 19,841 | 23,314 | 28,088 | 30,273 | 27,064 |
| Imports of Goods and Services (Annual % Change) | 16.6 | 11.5 | 8.6 | 6.8 | -5.1 |
| Exports of Goods and Services (Annual % Change) | 16.3 | 7.8 | 5.3 | 4.6 | -9.7 |
| Imports of Goods and Services (in % of GDP) | 42.8 | 44.5 | 45.3 | 44.6 | 41.7 |
| Exports of Goods and Services (in % of GDP) | 41.8 | 42.0 | 41.9 | 40.4 | 37.3 |
| Trade Balance (million USD) | -10,671 | -14,551 | -18,019 | -19,964 | -21,930 |
| Trade Balance (Including Service) (million USD) | -1,946 | -5,304 | -8,157 | -10,286 | -11,150 |
| Foreign Trade (in % of GDP) | 84.6 | 86.5 | 87.1 | 85.0 | 79.0 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2021 |
|---|---|
| Germany | 20.5% |
| Italy | 10.4% |
| France | 6.4% |
| Hungary | 5.7% |
| Poland | 4.0% |
| See More Countries | 53.0% |
| Main Suppliers (% of Imports) |
2021 |
|---|---|
| Germany | 20.2% |
| Italy | 8.9% |
| Hungary | 6.9% |
| Poland | 6.2% |
| China | 5.5% |
| See More Countries | 52.4% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
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Source: United Nations Statistics Division, Latest Available Data
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.).
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.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Romania, please visit portal Datelazi.ro, providing official data on the geographical, gender and age distribution of the epidemic in the country (in Romanian). Daily updates are available on the website of the Ministry of Health (in Romanian).
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
To find out about the latest public health situation in Romania and the current sanitary measures in vigour, please consult the official governmental portal stirioficiale.ro, including the up-to-date information on the containment measures put in place. Public health recommendations are available on the website of the Romanian government (in Romanian). Further information is available on the portal of the National Institute of Public Health (in Romanian).
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the Romanian Directorate-General for Customs (in Romanian).
Following the measures taken by the European Commission, an export license is required to export personal protective equipment outside of the European Union.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Romania on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
To know about the economic measures taken by the Romanian government to address the impact of the COVID-19 pandemic on the national economy, please visit the website of the Ministry of Finance (in Romanian). For info about the financial measures taken by the National Bank of Romania (NBR), click here. An overview of the measures is available on the guide by Deloitte.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Romanian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Romania in the IMF’s Policy Tracker platform.
For the information on the local business support scheme and taxation measures established by the Romanian government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the website of the Ministry of Finance (in Romanian) and that of the Ministry of Labour and Social Protection. The European Commission approved a EUR 3.3 billion Romanian scheme to support SMEs.
Further information is available on the guide by Deloitte.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.
The Export–Import Bank of Romania (Exim Bank) launched a new insurance product to support exporters during the COVID-19 crisis.
The European Commission adopted a Temporary Framework for State aid measures to help the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the member States where needed.
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Latest Update: November 2022
