EU Economy – Lessons Learned by a Newcomer:

Romania

Wednesday, 28 September 2011

Romanian economic developments

in the European context

London, September 28, 2011

Radu Şerban

Romania and UK – strategic partners

Romania, the 7th largest EU Member State, in terms of population

82.3

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Romania 9th 238.400 sq km

Romania, the 17th largest EU Member State, in terms of GDP

2,40

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€ Romania 17th

Public debt

8085.1

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0102030405060708090

EU 27 Euro zone Romania

% o

f G

DP

Budget deficit

-6.4 -6.4-7

-6

-5

-4

-3

-2

-1

0

EU 27 Romania

% o

f G

DP

Unemployment

9.7 10.2

7.4

0

2

4

6

8

10

12

EU 27 Euro area Romania

%

In July 2011 only 4.7 %

Minimum wages

Romania268

Greenfield investments attracted January-April 2011

5.2

3.13 2.8 2.2 1.8 1.2

7.25.8

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Source: UNCTAD Report July 2011

50,5

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0

20

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EU Romania

Energy dependence

Share of imports in total energy consumption, %

BP plans a new gas pipeline:SOUTH –EAST EUROPE PIPELINE,

a possible alternative to Nabucco

September 26, 2011

Optimism about the future of EU - Eurobarometer 2011

59

68

545658606264666870

EU 27 Romania

% o

f po

sitiv

e an

swer

s

If you want to find enthusiastic Europeans come to Bucharest!

BBC4, 19 Sept. 2011

Citizens in favour of the accession of Turkey to EU - Eurobarometer 2011

6152 52

4841

0

10

20

30

40

50

60

70

Romania Hungary Sweden Slovenia Lithuania

% o

f po

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sww

ers

Ease of doing business

7255 62 64

74 78

109

020406080

100120

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ank

Rep

ort

Corporate tax

10%

16% 16%19% 19% 19%

21%

0%

5%

10%

15%

20%

25%

-32

3.5

-40

-30

-20

-10

0

10

Total EU funds 2007-2013

Absorbed

bn

.€

EU Funds

Available EU funds for 2011-2013

-3.5

28.5

-10

-5

0

5

10

15

20

25

30

35

Absorbed Available

bn

. €

Most visited zones in Romania

Others

Transylvania

Moldova

Carpathian Mountains

Maramures

Seaside

Bucharest

Bucovina

TOURISM – huge potential

Convergence criteria for eurozone

Inflation rate

Government finances

ERM II membership

Interest rate

annual government deficit to

GDP

gross government

debt to GDP

Reference

value 

No more than 1.5 percentage points higher than the average of the three best performing member states of the EUmax 3.0%

max. 3% max. 60% min. 2 years

not more than 2 percentage points higher than in the three lowest inflation member statesmax 6.4%

8% in 2010,3% target 2011

6.4%, 3 % in 2012

30.8%0 years, but

constant X rate in the last 2 years

6.4%

Target: to meet criteria in 2015

Exchange rate in Euro

National Bank of Romania, estimates

Annual rate of inflation – red line

Current account balance

% of GDP

Including reinvested profit NCP prognosis

Total Risk Index: credit trends, loan/deposit ratios, debt levels,` current account balances, exports, and FX reserves

Source: UBS, December 2010

Romania, between Switzerland and Germany

Romania’s sovereign rating by CRAs

Fitch Moody’s Standard & Poor’s

Investment grade

July 2011: upgraded from

BBB- to BB+Baa3 BB+

FT July 5: Stefan Wagstyl

Romania: National Reforms Program 2011 – 2013 (published April 2011)

Main objectives:

Resuming the growth and creating new jobs

Resuming the growth and creating new jobs

Sustainable public finances

Protecting the vulnerable categories of population etc.

Major targets

GDP growth 1.5% in 2011, EBRD: 1.9%; 3.8%/2012

Inflation 4.8 % in 2011 and ≤ 3 % next year

C/A deficit -4.3%

Budget deficit -3% in 2012

Government debt/ GDP 30.8%

Qualitative elements:

A factor driven economy

An innovation driven economyFrom To

Romania and UK – strategic partners

FT, Sept 15, 2011