Romania

Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of economic information | Political outline

Economic indicators

Romania, after having joined European Union in January 2007, is expected to start a new phase of economic growth with substantial foreign investments. The GDP growth rate was 8.4% in 2004 and slackened substantially to 4.1% in 2005 due to floods and rise in imports. A revival to 7,7% has been emerging in 2006 and should stay over 6% in 2007 and 2008 according to the IMF forcecast. There has been continuous decline in inflation for last 10 years; from 154.8% in 1997 to an estimated figure of 4.3% in 2007. The National Bank of Romania (the central bank) has tightened monetary policy. The unemployment rate touches nearly 7.5% of the active population. Romania remains one of the poorest European countries, but has considerable potential for development because of its rich agricultural lands, educated & skilled work force, and tourism.

GDP Indicators	2004	2005	2006	2007	2008
GDP (billions USD)	75.52	98.86	121.90	158.53e	190.75e
GDP (constant prices, annual % change)	8.5	4.1	7.7	6.3e	6.0e
GDP per capita (USD)	3,465.67	4,552.82	5,633.36	7,351.68e	8,876.46e
Inflation rate (%)	11.9	9.0	6.6	4.3e	4.8e
Unemployment rate (% of the labor force)	8.0	7.2	7.3	n.c.	n.c.
Current Account (billions USD)	-6.34	-8.58	-12.52	-21.91e	-25.17e
Current Account (in % of GDP)	-8.4	-8.7	-10.3	-13.8e	-13.2e

Source: IMF - World Economic Outlook Database; ILO, Laborstat - Yearly Statistics

Note: (e) Estimated data

Socio-demographic indicators	2004	2005	2006
Unemployment rate (%)	8.0	7.2	7.3

Source:

Main sectors of industry

Agriculture is an important sector in Romania. It employs nearly 25% the active population and contributes nearly 10% to the GDP. The main crops are cereals, sugar beets and potatoes; though the yield remains very low. About 25% of the country is forested (especially around Transylvania) and wood industry is developing very fast. Romania has an inadequate supply of mineral resources and thus needs to import raw material and fuels, although historically it has been an important oil-producing centre. The manufacturing sector is largely based on heavy industry (still Soviet-styled) and contributes nearly one-third to the GDP. Major manufactured products include steel products, machinery, transport vehicles, and chemicals. Technological modernization of the industry is very much needed. Government has initiated privatization programme to attract investors. Tourism is a growing industry; with Bucharest being called as the “Paris of the East.”

Breakdown of economic activity by sector	Agriculture	Industry	Services
Value added (annual % change)	3.0	6.0	5.0
Value added (in % of GDP)	10.5	37.9	51.5
Employment by sector (in % of total employment)	32.1	30.3	37.5

Source: World Bank - World Development Indicators - last available data.

Monetary indicators	2002	2003	2004	2005	2006
Average annual exchange rate for 1 USD	3.31	3.32	3.26	2.91	2.81

Source: World Bank - World Development Indicators

Foreign trade in figures

The share of foreign trade in Romania’s GDP is nearly 85%, which will now improve further after becoming a EU member. Russia is the main source for energy imports. EU is the largest trade partner contributing nearly one-third to Romania’s total foreign trade. The top three export partners are: Italy, Germany and Turkey. The commodities mainly exported are apparel & clothing, electric machinery, mineral fuels & oils, and iron & steel. Romania’s top three import partners are: Italy, Germany and Russia. The country mainly imports mineral fuels & oils, machinery, electric & electronic equipment, vehicles, and plastics.

Foreign trade indicators	2002	2003	2004	2005	2006
Imports of goods (millions USD)	16,487	22,155	30,150	37,348	n.c.
Exports of goods (millions USD)	13,876	17,618	23,485	27,730	n.c.
Imports of services (millions USD)	2,338	2,958	3,879	5,518	n.c.
Exports of services (millions USD)	2,347	3,028	3,614	5,083	n.c.
Imports of goods and services (annual % change)	12.1	13.6	18.3	3.7	8.6
Exports of goods and services (annual % change)	16.9	7.1	15.9	4.2	10.3
Imports of goods and services (in % of GDP)	41.1	42.2	45.0	43.3	44.5
Exports of goods and services (in % of GDP)	35.4	34.7	35.9	32.9	34.0
Trade Balance (millions USD)	-2,611	-4,537	-6,665	-9,618	n.c.
Trade Balance (including service) (millions USD)	-2,602	-4,467	-6,930	-10,053	n.c.
Current Account (millions USD)	-1,525	-3,311	-6,382	-8,504	n.c.
Current Account (in % of GDP)	-3.3	-5.6	-8.5	-8.6	n.c.
Foreign trade (in % of GDP)	76.6	76.9	81.0	76.3	78.5

Source: World Bank - World Development Indicators

Main partner countries

Main customers (% of exports)	2006
Italy	18.1%
Germany	15.7%
Turkey	7.7%
France	7.5%
Hungary	4.9%

Main suppliers (% of imports)	2006
Germany	15.2%
Italy	14.6%
Russia	7.9%
France	6.5%
Turkey	5.0%

Source: 2006

Main products

Main exports (% of exports)	2006
Electrical machinery and equipment	11.8%
Mineral fuels, mineral oils	10.0%
Articles of apparel and clothing accessories	9.9%
Machinery and mechanical appliances	8.5%
Iron and steel	7.4%

Main imports (% of imports)	2006
Mineral fuels, mineral oils	13.5%
Machinery and mechanical appliances	13.4%
Electrical machinery and equipment	10.8%
Vehicles other than railway or tramway	10.8%
Plastics	4.7%

Source: 2006

To see more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of economic information

Ministries: Ministry of Economy and Finance
Statistical Office: National Institute of Statistics of Romania
Central Bank: National Bank of Romania
Stock Exchange: Bucharest Stock Exchange
Online newspapers: Economistul
Romania Libera (in Romanian)
Monitorul (in Romanian)
Search Engines: Rol
Cautare Avansata
Romanian Voice

Political outline

Executive Power: The President is the head of the state and is elected by a popular vote for a five-year term. President is the commander- in-chief of the armed forces and is responsible for safeguarding the constitution. According to the constitution of Romania, President acts as mediator among the various power centers within the state. Prime Minister is appointed by the President with the consent of the parliament (generally the leader of the majority party) to serve a four-year term. Prime Minister is the head of the government and enjoys the executive powers which include implementation of the law in the country and running the day-to-day affairs. The Council of Ministers (cabinet) is appointed by the Prime Minister.
Legislative Power: The legislature in Romania is bicameral. The Parliament consists of: Senate (the upper house) having 137 seats and the Chamber of Deputies (the lower house) having 332 seats. The members of both the houses are elected by direct, popular vote on a proportional representation basis to serve four-year terms. The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. Prime Minister does not have the power to dissolve the Parliament directly, but President can do so after consultation with the political parties represented in the Parliamnet.The people of Romania have considerable political rights.
Main political parties: Romania has a multi-party system, where parties generally work with each other to form coalition governments. The major political parties in the country are:
- PSD (Social Democratic Party) – follows social-democratic ideology,
- PNL (National Liberal Party) – advocates liberalism, both economic and social,
- PD (Democratic Party) – follows centre-right ideology,
- PC (Conservative Party) – advocates family values and nationalism without chauvinism,
- PRM (Greater Romania Party) – a right-wing strong nationalist party.
Current political leaders: President: Traian BASESCU (since December 2004) - PD
Prime Minister: Calin Popescu-TARICEANU (since December 2004) – PNL, heading a coalition government with PD
Next election dates: Presidential: November-December 2009
Chamber of Deputies: November 2008