The data released by the National Bank of Romania (BNR) reveals that over the 12 months leading up to August 2023, the gross inflows of foreign direct investments (FDI) into the country experienced a significant 16% year-on-year decline, amounting to EUR 7.7 billion. This marks a noteworthy reduction compared to the previous year.
When measured as a ratio to Romania’s GDP, the FDI figures also tell a story of decline. The FDI-to-GDP ratio dropped to 2.5% during the same period. This marks a substantial decrease from the 4.6% ratio observed in the preceding 12 months, and it closely resembles the 2.6% ratio from the 12 months prior to that.
On a more positive note, there was a considerable surge in equity FDI. In the 12 months leading up to August 2023, equity FDI reached EUR 2.55 billion, which is a fourfold increase from the figures recorded in the previous 12-month period.
More than half of the total FDI received in Romania, amounting to EUR 4.91 billion, took the form of reinvested profits. These are earnings reported by foreign direct investment companies operating within Romania that have not yet been repatriated. While this figure represents a decrease from the EUR 6.4 billion in reinvested earnings noted in the 12 months prior to August 2022, it still surpasses by more than double the EUR 2 billion in reinvested earnings during the 12 months leading up to August 2019.
These statistics paint a picture of fluctuating FDI trends in Romania. While the gross inflow of investments decreased, there was a notable increase in equity FDI, and foreign companies continued to reinvest substantial profits in the country. These fluctuations in FDI may be indicative of changing economic conditions and investor sentiment within Romania during the specified period.