A consumer boom fuelled by tax cuts and increases to public sector pay saw Romania boast the fastest economic growth rate of all European Union (EU) countries at 7% last year compared to 2.6% across the region as a whole.
But political turmoil, including three prime ministers in the space of a year, has unfortunately taken its toll. Not only has economic growth slowed, but the situation has discouraged investment, leading to Eurostat branding the country’s roads and health service as the EU’s worst. In fact, based on average income, or GDP per capita, Romania is the 10th poorest country in Europe at US$9,520.
Moreover, the European Bank for Reconstruction and Development, recently warned the country that it needed to shift its economic model if it is to avoid a future financial shock. As a result, it advised boosting investment in infrastructure such as transport, schools and hospitals – and the new premier Viorica Dancila has promised to do so.
Nonetheless, growth is expected to continue over the year ahead, albeit at a slower rate – the World Bank expects GDP to grow by 4.5% in 2018, up from the 3.7% originally forecast last June. The country’s finance ministry analysts, on the other hand, put the figure at more like 6.1%, an increase on the previous estimate of 5.5%.
What these figures indicate is that Romania, which has suffered for years from a poor reputation is changing. For example, consumers are now enjoying steadily rising incomes, which has attracted international brands and big retail chains such as France’s Carrefour and Germany’s Penny to the country.
These new arrivals are, in turn, driving increased demand for overseas talent, not least because Romania has historically struggled to retain its native workforce. Considerable numbers of skilled professionals left the country when times were bad and, while this departure rate has fallen dramatically lately, there are still skills gaps in many areas, which is proving challenging as the economy continues to expand.
But even though the number of emigrants is falling, at the last count Romania still suffered the third highest talent shortage of any nation on earth. Unsurprisingly then, overseas recruitment has risen, particularly in areas such as retail and hospitality.
Potential for growth
But sectors such as IT, technology and manufacturing are also in growth mode. For instance, on top of the contractor logistics support services that US giant Lockheed Martin already supplies to the Romanian air force, it will now also deliver F-16 Fighting Falcon Training Systems by 2019, providing an enormous boost to these industries.
It is also worth noting that the country, which is believed to be the first commercial producer of oil in the world, still has the largest reserves in Eastern Europe, although it would be unfair to rank it as a leader in the global energy market. The sector has been on the wane in Romania for some time, but it is still active and contributes a large chunk of the nation’s economic output.
There is also potential for further growth if the Lukoil Petrotel refinery, which is one of the biggest in the country, continues its recent growth spurt. But the sector does face major challenges in recruiting oil and gas specialists who have their pick of ‘sexier’ locations such as the Middle East, Latin America and the US.
On the plus side, such is the shortage of skilled expertise that those who do decide to take a chance here are likely to earn an attractive salary, particularly if the market continues to improve.
And Romania is definitely a destination worth considering as it is a nation on the up in terms of economic prosperity. In addition, Romanians enjoy a slower, more relaxed pace of life than people in Western Europe and benefit from having both the Black Sea coastline and the Carpathian Mountains within the country’s borders. Together they account for a huge proportion of its tourism income.
But it is also fair to say that corruption is still commonplace and often blights external views of Romania’s business sector. Moreover, the domestic taxation system is highly complex, which means it is advisable to partner with a specialist to find your way around it, particularly if you do not speak Romanian.
On the whole, however, if you can ignore outdated stereotypes and dig a bit deeper, you will find a country that has a lot more to offer than you might initially think.
Michelle Reilly has almost 20 years’ experience in contractor management. She joined CXC in 2009 to set-up its global Europe, Middle East and Africa business, and last year led a management buyout of the recruitment agency side of the organisation. Michelle is now chief executive of 6CATS International, which provides compliant contractor management solutions.
A consumer boom fuelled by tax cuts and increases to public sector pay saw Romania boast the fastest economic growth rate of all European Union (EU) countries at 7% last year compared to 2.6% across the region as a whole.
But political turmoil, including three prime ministers in the space of a year, has unfortunately taken its toll. Not only has economic growth slowed, but the situation has discouraged investment, leading to Eurostat branding the country’s roads and health service as the EU’s worst. In fact, based on average income, or GDP per capita, Romania is the 10th poorest country in Europe at US$9,520.
Moreover, the European Bank for Reconstruction and Development, recently warned the country that it needed to shift its economic model if it is to avoid a future financial shock. As a result, it advised boosting investment in infrastructure such as transport, schools and hospitals – and the new premier Viorica Dancila has promised to do so.
Nonetheless, growth is expected to continue over the year ahead, albeit at a slower rate – the World Bank expects GDP to grow by 4.5% in 2018, up from the 3.7% originally forecast last June. The country’s finance ministry analysts, on the other hand, put the figure at more like 6.1%, an increase on the previous estimate of 5.5%.
What these figures indicate is that Romania, which has suffered for years from a poor reputation is changing. For example, consumers are now enjoying steadily rising incomes, which has attracted international brands and big retail chains such as France’s Carrefour and Germany’s Penny to the country.
These new arrivals are, in turn, driving increased demand for overseas talent, not least because Romania has historically struggled to retain its native workforce. Considerable numbers of skilled professionals left the country when times were bad and, while this departure rate has fallen dramatically lately, there are still skills gaps in many areas, which is proving challenging as the economy continues to expand.
But even though the number of emigrants is falling, at the last count Romania still suffered the third highest talent shortage of any nation on earth. Unsurprisingly then, overseas recruitment has risen, particularly in areas such as retail and hospitality.
Potential for growth
But sectors such as IT, technology and manufacturing are also in growth mode. For instance, on top of the contractor logistics support services that US giant Lockheed Martin already supplies to the Romanian air force, it will now also deliver F-16 Fighting Falcon Training Systems by 2019, providing an enormous boost to these industries.
It is also worth noting that the country, which is believed to be the first commercial producer of oil in the world, still has the largest reserves in Eastern Europe, although it would be unfair to rank it as a leader in the global energy market. The sector has been on the wane in Romania for some time, but it is still active and contributes a large chunk of the nation’s economic output.
There is also potential for further growth if the Lukoil Petrotel refinery, which is one of the biggest in the country, continues its recent growth spurt. But the sector does face major challenges in recruiting oil and gas specialists who have their pick of ‘sexier’ locations such as the Middle East, Latin America and the US.
On the plus side, such is the shortage of skilled expertise that those who do decide to take a chance here are likely to earn an attractive salary, particularly if the market continues to improve.
And Romania is definitely a destination worth considering as it is a nation on the up in terms of economic prosperity. In addition, Romanians enjoy a slower, more relaxed pace of life than people in Western Europe and benefit from having both the Black Sea coastline and the Carpathian Mountains within the country’s borders. Together they account for a huge proportion of its tourism income.
But it is also fair to say that corruption is still commonplace and often blights external views of Romania’s business sector. Moreover, the domestic taxation system is highly complex, which means it is advisable to partner with a specialist to find your way around it, particularly if you do not speak Romanian.
On the whole, however, if you can ignore outdated stereotypes and dig a bit deeper, you will find a country that has a lot more to offer than you might initially think.
Michelle Reilly has almost 20 years’ experience in contractor management. She joined CXC in 2009 to set-up its global Europe, Middle East and Africa business, and last year led a management buyout of the recruitment agency side of the organisation. Michelle is now chief executive of 6CATS International, which provides compliant contractor management solutions.
