Country Trade Risk Index (ERI): 95.55
Country risk reference rating: 5 (5/9)
Country Risk Outlook: Negative
Economic and trade risks
Romania’s nominal GDP in 2012 was US$169.4 billion, per capita GDP was US$7,900, and the real economic growth rate was 0.7%. Agriculture accounts for 10% of GDP, industry accounts for 61%, and services account for 29%. The main industrial sectors are machinery manufacturing, construction, shipbuilding, textiles, high technology and biotechnology.
The political situation in the Republic of Romania is temporarily stable, but there are still many differences and contradictions within the coalition government. Whether the political situation can remain stable has a huge impact on the implementation of various economic policies. Romania’s economic growth is slow, but the outlook is not optimistic. Although the fiscal deficit level has declined, there is still a risk of exceeding the EU limit again in the future.
Bilateral economy and trade
China and Romania have very close exchanges and cooperation in culture, science and technology, and education. In recent years, China-Romania economic and trade relations have developed at a good momentum. In 2012, the total bilateral trade between China and Romania was US$3.8 billion, of which China exported US$2.8 billion, China imported US$1 billion, and China had a surplus of US$1.8 billion. As of June 2013, China’s total investment in Romania was US$410 million.
The bilateral economic and trade between China and Romania has the following characteristics: trade imbalance and China’s long-term surplus. China is Romania’s third largest trading partner outside the EU, but China’s exports to it have always been greater than its imports. Although there were deficits in 1995 and 2002, the rest of the years were surpluses. From the perspective of the structure of import and export commodities, commodities are highly concentrated. The main commodities exported by China to Romania include motors, boilers, medical surgical tools, photographic equipment, mechanical equipment, etc. The main commodities imported by China from Romania include boilers, mechanical equipment and parts, wood and wood products, charcoal, etc.
Business environment
Over the past 10 years, Romania’s investment environment has gradually improved in order to attract more foreign investment. at present. Romania’s infrastructure is also undergoing modernization, especially the expansion of the road network. After Romania joined the EU in 2007, it carried out efforts to simplify tax collection and administration, improve the legal system and increase transparency. The country is about to undergo tax reform, with the main measures being the introduction of a new oil and gas management and tax system, and the possible introduction of a progressive and complex tax system. Romania’s tax revenue accounts for 12% of GDP, which is lower than the EU average, and its evasion rate accounts for about 12% of GDP. Starting from 2013, taxpayers will be able to pay income tax and social security tax in a single form. Most of the EU’s main laws have been adopted by Romania, but there is still room for significant improvements in implementation and judicial independence. Overall, Romania’s investment environment continues to improve.
Overall evaluation
Since the establishment of diplomatic relations between China and Romania, economic and trade cooperation has developed rapidly, but the long-term imbalance in trade development requires attention. In addition, as Romania joins the EU, its trade and investment environment will become more transparent and its trade and investment standards will become more standardized. Therefore, when Chinese enterprises enter Romania to carry out trade and investment activities, they must strengthen their understanding of EU laws. Romania still uses its own currency. Therefore, Chinese companies must pay close attention to changes in Romania’s financial environment and guard against risks caused by changes in the Leu currency exchange rate.
Based on the analysis and assessment of the current overall situation, Romania’s country trade risk index (ERI) is 95.55, the country risk reference rating is 5 (5/9), the country risk level is medium to high, and the country risk outlook is negative.
