Exceptional times, exceptional measures
In 2022, foreign direct investment in Romania reached a record level of over 10 billion euros
Călin Coțoiu, 04.04.2025, 13:25
In 2022, foreign direct investment in Romania reached a record level of over 10 billion euros. An increase of 12.3% compared to the previous year, supported by cyclical factors, but also by others that reflected the relaxation of pandemic restrictions or the resilience of the Romanian investment climate, despite geopolitical tensions and the energy crisis. Mainly concentrated in industry, trade and financial and insurance Services, investments have continued to decline since then. In 2023, they were estimated at around 6.6 billion euros, and the following year they decreased by another one billion euros. And data published by the National Bank of Romania show that, in the first month of this year, foreign direct investment fell by half compared to January 2024. The instability on the political scene has accentuated this downward trend, in which the geopolitical factor plays a major role. Meanwhile, the financial rating agencies have worsened Romania’s outlook – it is no longer stable, but negative, although the country is still in the category of those recommended for investment, albeit on ranking last.
The need for exceptional measures to rectify the situation is becoming increasingly evident, say various economic analysts. One of them is university professor Mircea Coșea:
“We have entered a period in which the future of Romania is quite gloomy in terms of the economy, and especially in terms of attractiveness for foreign capital. In addition to the fact that we have political instability – which will be prolonged, because, regardless of the outcome of the elections in May, we will wait and see what happens – from my point of view, things are evolving negatively more from a geopolitical point of view. Because Romania is a bit isolated at the moment. I was scared by the statement of the American embassy which takes up a speech by the American vice president in which this label of a country with a still poorly developed democracy, with governance mistakes, is maintained. We are a black sheep in this area from the point of view of the interest of the new American administration; the war in Ukraine, even if it ends up with peace, of a certain kind, the border with the Russian Federation will be very close to us. All these things make Romania enter a difficult moment in terms of foreign investments. That is why I believe that exceptional measures must be taken.”
In exceptional times, exceptional measures must be taken in several areas, insists economic analyst Mircea Coșea :
“The first area is that of extraordinary incentives that we should give, temporarily, to foreign investors. Incentives that we have not provided so far, in terms of taxation, land allocation, in terms of everything that means a greater degree of attractiveness for our neighbors. Secondly, a very intense mobilization of what is called economic diplomacy or commercial diplomacy. Thirdly, there must be propaganda, in the good sense of the word, to show that Romania is a country that, despite temporary difficulties, such as deficits or difficulties in attracting funds, has resources much superior to others, and deserves to attract attention in terms of investments.”
Professor Mircea Coșea mentions in this context the agricultural processing industry, energy, and tourism.
‘We are languishing in apathy’, he says, ‘and we are waiting for someone to come and ask us: do you want investments? No, we have to go and ask for them. We have to go during this period, urgently, to get in touch with the new American administration to clarify things, to show that Romania is actually a country that has a democracy, that has certain difficulties, but that is on the way to solving them.’
Risk aversion has increased not only in Romania, on the other hand, university professor Daniel Dăianu points out, economist and former Minister of Economy and Finance:
“We are living in a period of, to say the least, increased uncertainty and unpredictability. The Trump administration has made astonishing moves in many respects in the relationship with Russia, which is in a military confrontation in Ukraine. We have a trade war, not only announced, it is already underway with high tariffs, which concern the relationship between the United States and the EU. We will also have a very likely currency war. For as long as we have known, when trade relations are very tense, states try to use the exchange rate as a way to boost exports and discourage imports. It is not only about Romania, therefore. (…) All this creates a much more uncertain, unpredictable context than the traditional complaints that the business environment had, namely that it is necessary to operate a stable fiscal framework, so that there are no changes in economic policy that would ruin business plans. These are changes that are disruptive. They were unthinkable. What happens after President Trump’s return changes the post-war order in Europe in a way.”
These are changes that cannot fail to have effects on business plans, concludes Daniel Dăianu.
