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3 December, 2020updated 02 Nov 2021 15:37

The state of play: FDI in Romania

FDI in Romania has seen a sharp decline due to Covid-19, but its agriculture, ICT, transport and automotive sectors are cited as areas that can help the country bounce back.

By Sofia Karadima

romania-fdi-automotive

Workers on a B-Max assembly line at the Ford factory in Craiova, Romania. The automotive sector is seen as one of the country’s strengths and an area that will help it attract FDI in the post-Covid environment. (Photo by Daniel Mihailescu/AFP via Getty Images)

Romania has seen increasing volumes of foreign direct investment (FDI) for much of the past decade, but the Covid-19 outbreak has hit the country hard.

Indeed, data from the National Bank of Romania shows that FDI inflows into the country have experienced a sharp drop in 2020, coming in at $2.31bn (€1.9bn) for the first nine months of the year, down from €5.35bn for the same period in 2019.

Romania’s FDI shows decrease after years of growth

Despite 2019’s FDI inflows looking impressive, they do represent a slight drop after a few years of steady growth. According to the UN Conference on Trade and Development (UNCTAD) 2020 World Investment Report, Romania’s FDI inflows stood at $5.9bn in 2019, down from $6.2bn in 2018, but up from $5.4bn the year before.

This is also reflected in the number of greenfield projects in the country. Data from UNCTAD shows that the country attracted 6,059 projects in 2019, down from 6,251 in 2018. However, the number of inward projects has increased over the past few years, with 3,877 in 2016 and 5,708 in 2017.

The Covid-19 pandemic has also had a negative impact on the completion of investment projects in Romania during 2020. The EY Attractiveness Survey reports that “46% of investors cancelled, decreased or paused investments due to the pandemic” in Romania. However, the survey also states that 50% of responders said that they “will go ahead with FDI projects in Romania, with no increase in their investment plans”.

The report adds that agriculture, ICT, transport and automotive are among the sectors that could boost the country’s growth potential over the next few years, according to the foreign investors surveyed.

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The most prominent source countries for FDI in Romania in 2019 were the Netherlands, Austria, Germany and Italy.

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