Romania Country Analysis

Romania is a country located in the southeast of Central Europe, north of the Balkan Peninsula. The country borders Ukraine in the north and northeast, Moldova in the northeast, Hungary in the northwest, Serbia in the southwest, Bulgaria in the south. Romania has also a coast to the Black Sea in the east. Being a member of the European Union, the country has the 7th largest area and the 9th largest population among the EU countries. Romania is Bucharest, which is the largest city in Romania.

Since 1990, Romania's population has steadily declined, both due to out-migration and increased death and decreasing birth rates. The population of the country, which was 23.21 million people in 1990, decreased to 19.8 million people in 2016. Approximately 96% of the Romanian people are literate. Romania, where the average age is 39.7, has a younger population than Western European countries. In Romania, which is located in the southeast of Europe and is the second-largest market in Central and Eastern Europe after Poland, a major rural migration has occurred with the beginning of the industrialization process. Romania, which had severe wounds during the Second World War, entered a period of the great struggle to develop its economy. Romania, which started to adapt to the free market system after the December 1989 Revolution, attached importance to foreign trade for economic development. Many reforms have been made for this purpose.

There are various problems with the national economy. Tax revenues cannot reach a sufficient level due to problems such as large unregistered economy in the country, the high rural population that can contribute to the tax system at a low rate, and the inability to collect taxes regularly. For this reason, education, health, welfare, infrastructure, and security expenditures are not sufficient. Romania has the lowest per capita income among the Eastern European countries, the lowest standards in terms of environmental standards, the highest unpaid tax debts, and the lowest education expenditure. The tight commercial and financial ties that the country has established with the Eurozone make Romania's economy risky against the developments in this region.

More than 70% of Romanian exports are to the European Union. Approximately 82% of bank assets belong to the banks located in EU countries. The crisis in the EU continues to affect the Romanian economy, and foreign companies are reluctant to invest in Romania. The average growth rate of the country is expected to be around 3.4% in the 2017-2020 period. Turkish investments in Romania have reached a total of 6 Billion Dollars with those coming from third countries. Approximately 13,500 companies with Turkish capital operate in Romania. About $ 6.2 billion worth of projects have been realized in Romania by 90 Turkish contracting companies until today. There are 254 Romanian capital companies in Turkey by 2017. 17 of them operate in Izmir.

Opportunities in the Romanian Market:

  • Agriculture and Livestock

Romania has rich agricultural lands and the lands of the country are suitable for growing a wide range of products. Since 1989, most of the privatization has been carried out in the agricultural sector. Between 1989-2004, 85% of arable lands and 98% of the livestock sector were privatized. Nevertheless, the agricultural sector was still inefficient among the new EU member states. After the communist era, 80% of the total arable lands were redistributed to the private sector as parcels in limited sizes, but until 2000, the size of only 2% of the farms exceeded 10 hectares. The slow progress of the fragmentation and merging activities that have been experienced as a result of redistribution of the lands to their former owners have also slowed down the mechanization and hence the development in the sector. The main agricultural products produced in the country are corn, wheat, potato, sunflower seed (kernel), barley, tomato, grape, apple, cabbage, and sugar beet. In animal products, chicken, sheep, pig, and cattle raising stand out.

  • Industry

The industry and manufacturing sector have been in trouble due to technological obsolescence and the aging of the facilities in the metallurgy, heavy industry. The practice of gathering the manufacturing industry facilities together during the communist period left the country along with the old and bulky industrial facilities in the post-revolution period. Closing inefficient factories and modernizing others have weakened the industry at first, but it resulted in favorable outcomes in the industry with a 25% increase between 2000-2004. The pace of privatization, which progressed slowly until the beginning of the 2000s, accelerated since 2001 and increased foreign investments, making it possible to modernize extensively. The main industrial products consisted of textiles, shoes, tires, cement, crude steel, household consumables, passenger cars, tractors, wine, and beer. The fastest-growing branches of industry in the early 2000s were automobile production and pharmaceutical products production, both of which were significantly supported by foreign direct investments. In recent years, some export products such as shoes and textiles have been negatively affected by competition with developed countries. The construction industry, which was adversely affected by the economic recession in the 1990s, started to develop by increasing housing demand, installment sales, road construction, and tourist facilities since the beginning of the 2000s, and this trend is expected to continue.

Foreign Trade of Romania

Romania’s Global Export

As you can see in the graphic below, while Romania's global export was 40 billion dollars in 2007, it appears to be 78 billion dollars by 2019 even though there are various fluctuations in the process.

Romania’s Global Import

When we analyze the import figures of Romania, we see that the import value, which was 70 billion dollars in 2007, reached 98 billion dollars in 2019.

Source: Romania Country Report, Wikipedia, TIM Romania Country Info Notes

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