Investment in Romania slides 29% in H1

Romania’s Foreign Direct Investment (FDI) landscape has witnessed a substantial setback, as revealed by a recent report from the National Bank of Romania, published on 13 September. The data disclosed a disconcerting 29% plunge in FDI during the initial seven months of 2023 when juxtaposed with the corresponding period in the preceding year.

The monetary inflow from non-resident investors into Romania during the January-July span of 2023 amounted to €4.25 billion (equivalent to $4.54 billion), marking a substantial contraction from the €5.99 billion registered during the equivalent period in 2022.

The crux of this FDI ingress in H1 2023 was rooted in net equity holdings, which aggregated to a notable €4.59 billion, notably offset by intra-group loans amounting to €343 million.

Romania’s trajectory in the FDI sphere had previously been intertwined with a robust economic upswing, characteristic of Central and Eastern European (CEE) nations prior to the global disruption wrought by the COVID-19 pandemic. Between 2016 and 2019, the nation’s economy had maintained an upward trajectory. Nevertheless, the year 2020 witnessed a 3.7% economic contraction, primarily attributable to the pandemic’s pervasive impact.

A glimmer of optimism manifested in 2021, as Bucharest played host to 215 inward FDI projects, solidifying its status as the third-highest recipient of such initiatives among CEE nations, trailing behind Poland with 424 projects and Turkey with 269.

However, when scrutinising FDI projects per million people, Romania revealed a relatively less impressive stance compared to its regional counterparts. In 2021, Romania found itself occupying the ninth position in the CEE region, recording a mere 11.2 projects per million people. This performance paled in comparison to Estonia, which emerged as the CEE’s foremost FDI destination per capita in 2021, boasting an impressive 27.1 projects per million people, as per data gleaned from GlobalData’s FDI Projects Database.

The implications of this pronounced slump in FDI for Romania’s economic landscape are yet to be fully comprehended. As the nation grapples with this alarming downturn, it faces the challenging task of devising strategies to regain its erstwhile allure in the eyes of global investors.