A rejuvenated Romanian economy is going from strength-to-strength.
After many years of being seen as the ‘poor man of Europe’, Romania’s economy has not only stabilised, but is thriving, a decade after its accession to the European Union, reports Kit Gillet of The Guardian.
Its economic growth has been boosted further in recent years by the arrival of many major global players, including Siemens, Fitbit, and Bosch, all of whom have either set up new operations or expanded pre-existing ones; car giant Ford, for example, has invested more than €1.2billion ($1.4 billion) in its Romanian operations since 2008.
The Romanian economy grew 5.7 percent year-on-year in the second quarter of 2017 – compared to the average EU growth rate of 2.4 percent, and the International Monetary Fund forecast that the economy will have grown by 5.5 percent for the whole of 2017.
The tech sector is showing particularly fast expansion, owing partly to the Communist legacy of excellent scientific, mathematic and technical education. The country’s strong language skills have also contributed, as they previously have to establishing Romania as a hub for IT outsourcing. Industry insiders predict the tech sector will double its share of the GDP by 2025, taking it to 12 percent – partially thanks to some of the fastest broadband speeds in the world.
Similarly, the services sector continues to expand, as do exports and manufacturing. Private consumption, meanwhile, hit a nine-year high in 2016 and increased by 8 percent again in the first half of 2017.
Whilst accession to the EU has contributed to Romania’s increased economic stability, so too have Government measures: A 5 percent cut in VAT, to 19 percent, since 2015, and a doubling of the minimum wage. Wages still remain well below the EU average, yet this has the effect of making the country an attractive proposition for outsourcing.
Certain challenges persist – the Guardian highlight poor-quality transport infrastructure, widespread – albeit low-level – corruption, and simmering public discontent with the Government as examples. However, despite this experts have predicted a continuation of the economic success that has given Romania one of the highest growth rates in Europe.