Romania

Romania is located in South-eastern Europe, bordering the Black Sea, between Bulgaria and Ukraine. With a population of 21.3 million, it is the second largest country in Central and Eastern Europe. Strong growth in exports since 2000, and accession to the EU in 2007 are factors that have led to strong economic growth in recent years, and GDP per employee is forecast to grow by almost 50% over the next two years while the rate of earnings growth is forecast to exceed all other EU countries. Interest rates have fallen and the rate of consumer price inflation has declined. Romania, which joined the European Union on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Domestic consumption and investment have fueled strong GDP growth in recent years, but have led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and address Romania's widespread poverty. Corruption and red tape continue to handicap its business environment. Inflation rose in 2007-08, driven in part by strong consumer demand and high wage growth, rising energy costs, a nation-wide drought affecting food prices, and a relaxation of fiscal discipline. Romania's strong GDP growth moderated markedly in the last quarter of 2008 as the country began to feel the effects of a global downturn in financial markets and trade, and growth is expected to be much weaker in 2009. Romania hopes to adopt the euro by 2014.

Economic Strengths

Oil reserves. Tourism potential. Steady export-led recovery since 2000.

Economic Weaknesses

Corruption & bureaucracy. Rising inflation. Slow transition from centrally planned to market economy. Delays in economic reform. Low foreign investment confidence.

Source: Central Intelligence Agency; The World Factbook, March 2009