Romania is an upper-middle income European Union member economy of Central-Eastern Europe. It has been referred as a "Tiger" due to its high growth rates and rapid development. Romanian economy growth is among EU’s fastest. Romania has the 11th largest in European Union by total nominal GDP and the 8th largest based on purchasing power parity and is one of the fastest growing major nation in recent history with consistent annual GDP growth rates above 6% (+8% for 2008). Romania is a member of the European Union (7th largest country), its most important trading partner. Its capital, Bucharest (with 2.6 million people - metropolitan area), is one of the largest financial centres in the region. Romania has experienced growth in foreign investment with a cumulative foreign direct investment totaling more than $50 billion since 1989.
Some economic predictions indicate that Romanian GDP will double by 2011, and one scholar has even suggested that Romania will overtake Italy in GDP per capita by 2020. Preliminary estimates for 2008 show a real GDP growth of 7.2%, while the forecasts for 2009-10 indicate an average of 6-6.5% per year. Future prospects are tied to the country's increasingly important integration with the European Union member states. The country is expected to join the Eurozone in 2014.
Index of Economic Freedom ranking 68th reflects Romania's business, fiscal and trade freedom, though labor freedom, property rights, and freedom from corruption affect negatively. Ease of Doing Business Index ranking 48th reflects Romania's easiness in getting credit, starting a business, good investor protection, contract enforcement, low tariffs, though closing business, dealing with licenses, registering property, paying taxes and employing workers is much harder.
Romania also has a strategic port which makes it more competitive than many of its neighbors to carry out such entrepreneurship activities. The Port of Constanta is the busiest on the Black Sea, surpassing others. In addition, Constanta's port infrastructure and skilled workforce, which is due to the success of Romania's education policy in producing skilled workers, is also fundamental in this aspect as they provide easier access to markets for both importing and exporting, and also provide the skill(s) needed to refine imports into exports.
Due to the dynamic boom economy in 2008, Romania now has 10 billionaires (in US dollars), compared to 2 in 2006. Romania is experiencing decline in mass emigration as the large difference in standards of living are decreasing. The Romanian current account deficit in 2007 increased by 66% from 2006, reaching 16.9 billion euro.
Romania's economic strength
Major industries in Romania are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods (especially home appliances), food, fashion, clothing, petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining and defense, (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment).
Romania's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. The country has been less successful in terms of developing world class multinational corporations. In addition, the small and medium-sized firms typically manufacture products that are technologically moderately advanced and therefore increasingly face crushing international competition.
Romania's main industries are clothing and shoe manufacturing, metal, extracting and processing of primary goods (timber, marble, rock), food processing, oil refining and chemical derivates, and to a lesser extent pharmaceuticals, heavy machinery, household electronics, etc. In recent years vehicle manufacturing (see Dacia Logan) has become an important industry. The information-technology-related industry is also growing.
Romania has a number of fashion houses, such as Agnes Toma, Steil and Steilmann. Dacia Logan (by Renault), Ford, ARO and Daewoo Romania are some car models manufactured in Romania. The Dacia Logan led sales in Romania in the first six months, ahead of the Škoda Fabia, Škoda Octavia (up 20% on a new model introduction), Opel Astra and Renault Mégane. Logan was also the top selling car in the region in Q2 2005, ahead of Škoda Fabia and Octavia (up 14.4%), Renault Mégane and Suzuki Ignis (up 5.1%).
Global trade relations
Italy is Romania's largest trading partner; two-way trade totaled some $22.6 billion in 2007. The principal Italy exports to Romania include computers, integrated circuits, aircraft parts and other defense equipment, wheat, and automobiles. Romania's chief exports to Italy include cut diamonds, jewelry, integrated circuits, printing machinery, and telecommunications equipment.
2.8% of the country's GDP is derived from Agricultural activity. While Romania imports substantial quantities of grain, it is largely self-sufficient in other agricultural products and food stuffs, due to the fact that food must be regulated for sell in the Romania retail market, and hence imports almost no food products from other countries. Romania imported in 2006 food products of 2.4 billion euros, up almost 20% versus 2005, when the imports were worth slightly more than 2 billion euros. The EU is Romania's main partner in the trade with agri-food products. The exports to this destination represent 64%, and the imports from the EU countries represent 54%. Other important partners are the CEFTA countries, Turkey, Republic of Moldova and the USA.
Romania is one of the world's major exporters of military equipment, accounting for 3-4% of the world total in 2007. EU members are represented by a single official at the World Trade Organization.