Economic overview Romania, in 36 editions.

Industry, which accounts for one-third of the labor force and generates over half the GNP, suffers from an aging capital plant and persistent shortages of energy. The year 1990 witnessed about a 20% drop in industrial production because of energy and input shortages and labor unrest. In recent years the agricultural sector has had to contend with drought, mismanagement, and shortages of inputs. Favorable weather A drought in 1989 helped produce 1990 contributed to a good lackluster harvest, although far below government claims. a problem compounded by corruption and a poor distribution system. The new government is slowly loosening the tight central controls of Ceausescu's command economy. It has instituted moderate land reforms, with close to one-third one-half of cropland now in private hands, and it has allowed changes in prices for private agricultural output. Also, the new regime is permitting the establishment of private enterprises of 20 or fewer employees enterprises, largely in services, handicrafts, and small-scale industry. New laws providing for the privatization of large state firms have been passed. However, most of the early privatization will involve converting state firms into joint-stock companies. The selling of shares to the public has not yet been worked out. Furthermore, the government has halted the old policy of diverting food from domestic consumption to hard currency export markets. So far, the government does not seem willing to adopt a thorough-going thoroughgoing market system. system, that is, there is great caution in decontrolling prices because of public opposition. The government has sharply raised price ceilings instead of lifting them entirely.

Industry, which accounts for about one-third of the labor force and
generates over half the GNP, GDP, suffers from an aging capital plant and
persistent shortages of energy. The year 1990 1991 witnessed about a 20% 17% drop in
industrial production because of energy and input shortages and labor
unrest. In recent years the agricultural sector has had to contend with drought,
flooding, mismanagement, and shortages of inputs. inputs, and disarray caused by the
dismantling of cooperatives. A drought shortage of fuel and equipment in 1990 1991
contributed to a lackluster harvest, a problem compounded by corruption and
a poor distribution system. The new government is slowly loosening the tight
central controls of Ceausescu's CEAUSESCU'S command economy. It has instituted moderate
land reforms, with close to more than one-half of cropland now in private hands, and
it has allowed changes in prices for liberalized private agricultural output. Also, the new regime is
permitting the establishment of private enterprises, largely in services,
handicrafts, and small-scale industry. New laws A law providing for the privatization
of large state firms have has been passed. However, most Most of the early privatization will involve converting large state firms have
been converted into joint-stock companies. The companies, but the selling of shares and
assets to the public private owners has not yet been worked out. Furthermore, delayed. While the government has halted
the old policy of diverting food from domestic consumption to hard currency
export markets. So far, the government does not seem willing to adopt a thoroughgoing market system, that is, there is great caution markets, supplies remain scarce in decontrolling prices because some areas. Furthermore, real
wages in Romania fell about 20% in 1991, contributing to the unrest which
forced the resignation of public opposition. ROMAN in September. The new government has sharply raised continues
to impose price ceilings instead of lifting them entirely. on key consumer items.

Industry, which accounts for about one-third of the labor force and
generates over half the GDP, suffers from an aging capital plant and
persistent shortages of energy. The year 1991 witnessed about a 17% drop in
industrial production because of energy and input shortages and labor
unrest. In recent years the agricultural sector has had to contend with
flooding, mismanagement, shortages of inputs, and disarray caused by the
dismantling of cooperatives. A shortage of fuel inputs and equipment a severe drought in 1991
1991 contributed to a lackluster poor harvest, a problem compounded by corruption and
a poor an obsolete distribution system. The new government is loosening the tight
central controls of CEAUSESCU'S command economy. It has instituted moderate
land reforms, with more than one-half of cropland now in private hands, and
it has liberalized private agricultural output. Also, the new regime is Private enterprises form an
permitting the establishment increasingly important portion of private enterprises, the economy largely in services,
handicrafts, and small-scale industry. A Little progress on large scale
privatization has been made since a law providing for the privatization
of
large state firms has been passed. was passed in August 1991. Most of the large state firms have
have been converted into joint-stock companies, but the selling of shares and
and assets to private owners has been delayed. While the government has halted
halted the old policy of diverting food from domestic consumption to hard currency
currency export markets, supplies remain scarce in some areas. Furthermore, real
wages in Romania fell about 20% in 1991, contributing to the unrest which
forced the resignation of ROMAN in September. The new
government continues
to impose price ceilings on key consumer items. In 1992
the economy muddled along toward the new, more open system, yet output and
living standards continued to fall.

Despite the continuing difficulties in moving away from the former
former command system, the Romanian economy seems to have bottomed out in
1993. in 1993-94. Market oriented reforms have been introduced fitfully
since the
downfall of CEAUSESCU in December 1989, with the result a growing
growing private sector, especially in services. The slow pace of structural
structural reform, however, has exacerbated Romania's high inflation
rate and
eroded real wages. Agricultural production rebounded in 1993
from the
previous year's drought-reduced harvest; food supplies are adequate,
but expensive. Bucharest resisted pressure to devalue harvest of 1992. The economy continued its currency
despite a $638 million trade deficit recovery in the first half of 1993 and the
emergence of a black market for hard currency. Unable to support the
currency, the national bank, nonetheless, was forced to depreciate the 1994, further gains being realized in agriculture,
currency 65% over the course of the year. The return of winter construction, services, and trade. Food supplies are adequate but
revealed that much of expensive. Romania's infrastructure had deteriorated over
the last four
five years due to reduced levels of public investment.
Residents of
the capital reported frequent disruptions of heating and
water
services. The slow and painful process of conversion to a more open
economy will continue in 1995.

Romania, one of the poorer countries in the region,
is continuing its difficult transition to a market-based economy.
After the collapse of the Soviet Bloc in
1989-91, Romania was left
with an obsolete industrial base and a
pattern of industrial capacity
wholly unsuited to its needs. For the next few years the country
lagged behind most of its neighbors in the pace of restructuring. Then In
in February 1997, Romania embarked on a comprehensive macroeconomic
stabilization and structural reform program. The domestic foreign
exchange market was freed, and controls on current-account program, but reform subsequently
convertibility were removed in October. has been a stop-and-go process. Restructuring programs include
liquidating large energy-intensive industries, industries and major agricultural and
and financial sector reform. The private sector share of GDP rose reforms. Today, Romania is continuing its
difficult transition to a market-based economy. GDP contracted by an
estimated 58% 7.3% in 1997, however, this total includes firms with 1998 after a 6.6% decline in 1997. Tight monetary
government-held minority stakes. Although progress has been made policy and slower exchange rate depreciation earlier in 1998 helped
privatizing small- lower inflation to an estimated 41% from 152% in 1997. The large
current account deficit and medium-sized firms, delays concerns about meeting debt payments in structural
reforms-including 1999 contributed to increased pressure on the postponement exchange rate towards
the end of sales 1998. Replacing the IMF standby agreement (suspended
because of lack of progress on structural reforms), servicing large state-owned
enterprises - threaten plans to revive GDP growth. In 1998, GDP will
likely be unchanged; debt payments, and inflation is projected to fall to 45% from bringing the budget under control are key
151% in 1997. priorities for 1999.

After the collapse of the Soviet Bloc in
1989-91, Romania was left with an obsolete industrial base and a
pattern of industrial capacity wholly unsuited to its needs. In
February 1997, Romania embarked on a comprehensive macroeconomic
stabilization and structural reform program, but reform subsequently
has been a frustrating stop-and-go process. Restructuring programs include
liquidating large energy-intensive industries and major agricultural
and financial sector reforms. Today, Romania is continuing its
difficult transition to a market-based economy. GDP In 1999 Romania's economy contracted for a third straight year - by an
estimated 7.3% 4.8%. Romania reached an agreement with the IMF in 1998 after August for a 6.6% decline $547 million loan, but release of the second tranche was postponed in 1997. Tight monetary
policy October because of unresolved private sector lending requirements and slower exchange rate depreciation earlier in 1998 helped
lower inflation differences over budgetary spending. Bucharest avoided defaulting on mid-year lump-sum debt payments, but had to significantly draw down reserves to do so; reserves rebounded to an estimated 41% from 152% in 1997. $1.5 billion by yearend 1999. The large
current account deficit government's priorities include: obtaining renewed IMF lending, tightening fiscal policy, accelerating privatization, and concerns about meeting debt payments restructuring unprofitable firms. Romania was invited by the EU in
December 1999 contributed to increased pressure on the exchange rate towards
the end of 1998. Replacing the IMF standby agreement (suspended
because of lack of progress on structural reforms), servicing large
debt payments, and bringing the budget under control are key
priorities for 1999. begin accession negotiations.

Romania, one of the poorest countries in of Central and Eastern Europe, began the transition from communism Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Over the past decade economic restructuring has lagged behind most other countries in the region. Consequently, living standards have continued to fall - real wages are down over perhaps 40%. Corruption too has worsened. The EU ranks Romania last among enlargement candidates, and the European Bank for Reconstruction and Development (EBRD) rates Romania's transition progress the region's worst. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. A new government elected in November 2000 promises to promote economic reform. Bucharest hopes to receive financial markets, and technical assistance from international financial institutions despite the global slowdown in 2001, strong domestic activity in construction, agriculture, and Western governments; negotiations over a new IMF consumption led to 4.8% growth. A standby agreement are to begin early in 2001. If reform stalls, Romania's ability with the IMF - covering the period October 2001 to borrow from both public March 2003 - provides a key opportunity for vigorous privatization, regulatory reform, deficit reduction, and private sources could quickly dry up, leading the curbing of inflation. The government in the past has not been able to another financial crisis. fully implement IMF agreements; its degree of success in this case will affect prospects for joining the EU.

Romania, one of the poorest countries of Central and Eastern Europe, Romania began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Over the past decade economic restructuring has lagged behind most other countries in the region. Consequently, living standards have continued to fall - real wages are down perhaps 40%. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets, and despite markets. Despite the global slowdown in 2001, 2001-02, strong domestic activity in construction, agriculture, and consumption led to 4.8% growth. A standby agreement with the have kept growth above 4%. An IMF - covering the period October 2001 to March 2003 - provides a key opportunity for vigorous Standby Agreement, signed in 2001, has been accompanied by slow but palpable gains in privatization, regulatory reform, deficit reduction, and the curbing of inflation. The government in the past has not been able Nonetheless, recent macroeconomic gains have done little to fully implement IMF agreements; its degree of success in this case will affect prospects for joining the EU. address Romania's widespread poverty, while corruption and red tape hinder foreign investment.

Romania began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Despite the global slowdown in 2001-02, strong domestic activity in construction, agriculture, and consumption have kept growth above 4%. An IMF Standby Agreement, standby agreement, signed in 2001, has been was accompanied by slow but palpable gains in privatization, deficit reduction, and the curbing of inflation. Nonetheless, The IMF Board approved Romania's completion of the standby agreement in October 2003, the first time Romania had successfully concluded an IMF agreement since the 1989 revolution. In July 2004, the Executive Board of the IMF approved a 24-month standby arrangement for $367 million. The Romanian authorities do not intend to draw on this arrangement, viewing it as a precaution. Meanwhile, recent macroeconomic gains have done little to address Romania's widespread poverty, while and corruption and red tape hinder foreign investment. handicap the business environment.

Romania began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Despite the global slowdown in 2001-02, strong domestic activity in construction, agriculture, and consumption have kept growth above 4%. An IMF standby agreement, signed in 2001, was has been accompanied by slow but palpable gains in privatization, deficit reduction, and the curbing of inflation. The IMF Board approved Romania's completion of the standby agreement in October 2003, the first time Romania had has successfully concluded an IMF agreement since the 1989 revolution. In July 2004, the Executive Board executive board of the IMF approved a 24-month standby arrangement agreement for $367 million. The Romanian authorities do not intend to draw on this arrangement, agreement, however, viewing it simply as a precaution. Meanwhile, recent macroeconomic gains have done little to address Romania's widespread poverty, and while corruption and red tape continue to handicap the business environment.

Romania began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Despite the global slowdown in 2001-02, strong domestic activity in construction, agriculture, and consumption have kept GDP growth above 4%. An IMF standby agreement, signed in 2001, has been accompanied by slow but palpable gains in privatization, deficit reduction, and the curbing of inflation. The IMF Board approved Romania's completion of the standby agreement in October 2003, the first time Romania has successfully concluded an IMF agreement since the 1989 revolution. In July 2004, the executive board of the IMF approved a 24-month standby agreement for $367 million. The Romanian authorities do not intend IMF concerns about Romania's tax policy and budget deficit led to draw on this agreement, however, viewing it simply as a precaution. breakdown of this agreement in 2005. In the past, the IMF has criticized the government's fiscal, wage, and monetary policies. Meanwhile, recent macroeconomic gains have done little only recently started to spur creation of a middle class and address Romania's widespread poverty, while corruption and red tape continue to handicap the business environment. Romanian government confidence in continuing disinflation was underscored by its currency revaluation in 2005, making 10,000 "old" lei equal 1 "new" leu.

Romania began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Despite the global slowdown in 2001-02, strong domestic activity in construction, agriculture, and consumption have kept GDP growth above 4%. An IMF standby agreement, signed in 2001, has been accompanied by slow but palpable gains in privatization, deficit reduction, and the curbing of inflation. The IMF Board approved Romania's completion of the standby agreement in October 2003, the first time Romania has successfully concluded an IMF agreement since the 1989 revolution. In July 2004, the executive board of the IMF approved a 24-month standby agreement for $367 million. IMF concerns about Romania's tax policy and budget deficit led to a breakdown of this agreement in 2005. In the past, the IMF has criticized the government's fiscal, wage, and monetary policies. Meanwhile, However, macroeconomic gains have only recently started to spur creation of a middle class and address Romania's widespread poverty, while corruption and red tape continue to handicap the business environment. Romanian government confidence in continuing disinflation was underscored by its currency revaluation in 2005, making 10,000 "old" lei equal 1 "new" leu. The economy grew at 6.4% in 2006, the strongest growth in the last decade. Romania joined the European Union on 1 January 2007, and the IMF has praised the country's recent reform efforts in preparation for EU accession.

Romania Romania, which joined the European Union on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Despite the global slowdown in 2001-02, strong domestic activity in construction, agriculture, and Domestic consumption and investment have kept fueled strong GDP growth above 4%. However, in recent years, but have led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and address Romania's widespread poverty, while corruption poverty. Corruption and red tape continue to handicap the its business environment. Romanian government confidence in continuing disinflation was underscored by its currency revaluation in 2005, making 10,000 "old" lei equal 1 "new" leu. The economy grew at 6.4% Inflation rose in 2006, 2007 for the strongest growth first time in eight years, driven in part by the last decade. Romania joined depreciation of the European Union on 1 January 2007, currency, rising energy costs, a nation-wide drought affecting food prices, and the IMF has praised a relaxation of fiscal discipline. Romania hopes to adopt the country's recent reform efforts in preparation for EU accession. euro by 2014.

Romania, which joined the European Union on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Domestic consumption and investment have fueled strong GDP growth in recent years, but have led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and address Romania's widespread poverty. Corruption and red tape continue to handicap its business environment. Inflation rose in 2007 for the first time in eight years, 2007-08, driven in part by the depreciation of the currency, strong consumer demand and high wage growth, rising energy costs, a nation-wide drought affecting food prices, and a relaxation of fiscal discipline. Romania's strong GDP growth moderated markedly in the last quarter of 2008 as the country began to feel the effects of a global downturn in financial markets and trade, and growth is expected to be much weaker in 2009. Romania hopes to adopt the euro by 2014.

Romania, which joined the European Union on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Domestic consumption and investment have fueled strong GDP growth in recent years, but have led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and address Romania's widespread poverty. Corruption and red tape continue to handicap its business environment. Inflation rose in 2007-08, driven in part by strong consumer demand and high wage growth, rising energy costs, a nation-wide drought affecting food prices, and a relaxation of fiscal discipline. Romania's strong GDP growth moderated contracted markedly in the last quarter of 2008 as the country began to feel the effects of a global downturn in financial markets and trade, and growth GDP fell more than 7% in 2009, prompting Bucharest to seek a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. Drastic austerity measures, as part of Romania's IMF-led agreement led to a further 1.9% GDP contraction in 2010. The economy is expected to be much weaker in 2009. Romania hopes return to adopt the euro by 2014. positive growth in 2011.

Romania, which joined the European Union on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Domestic consumption and investment have fueled strong GDP growth in recent years, growth, but have led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to handicap permeate its business environment. Inflation rose in 2007-08, driven in part by strong consumer demand and high wage growth, rising energy costs, a nation-wide drought affecting food prices, drought, and a relaxation of fiscal discipline. Romania's GDP contracted markedly in the last quarter As a result of 2008 as the country began to feel the effects of a global downturn in financial markets and trade, and crisis, Romania's GDP fell more than 7% in 2009, prompting Bucharest to seek a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. Drastic austerity measures, as part of Romania's IMF-led agreement agreement, led to a further 1.9% 1.6% GDP contraction in 2010. The economy is expected to return returned to positive growth in 2011. 2011 due to a strong export performance, but in a deflationary environment caused by bountiful crops and weak domestic demand. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by agreement, worth $6.6 billion, to promote compliance with fiscal targets, progress on structural reforms, and financial sector stability. The Romanian authorities have announced that they do not intend to draw funds from the facility. Growth slowed to less than 1% in 2012.

Romania, which joined the European Union on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Domestic consumption and investment fueled strong GDP growth, but led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's Romania''s widespread poverty. Corruption and red tape continue to permeate its the business environment. Inflation rose in 2007-08, driven by strong consumer demand and demand, high wage growth, rising energy costs, a nation-wide drought, and a relaxation of fiscal discipline. As a result of the increase in fiscal and current account deficits and the global financial crisis, Romania's GDP fell more than 7% in 2009, prompting Bucharest Romania signed on to seek a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. Drastic austerity measures, Worsening international financial markets, as part well as a series of Romania's drastic austerity measures implemented to meet Romania''s obligations under the IMF-led agreement, led bail-out agreement contributed to a 1.6% GDP contraction of 6.6% in 2009, followed by a 1.1% GDP contraction in 2010. The economy returned to positive growth in 2011 due to a strong export performance, but in exports, a deflationary environment caused by bountiful crops better than expected harvest, and weak domestic demand. In 2012, however, growth slowed to less than 1%, partially due to slackening export demand and an extended drought that resulted in an exceptionally poor harvest. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by agreement, worth $6.6 billion, to promote compliance with fiscal targets, discipline, encourage progress on structural reforms, and strengthen financial sector stability. The Romanian authorities have announced that they do not intend to draw funds from under the facility. Growth slowed to less than 1% in 2012. agreement.

Romania, which joined the European Union EU on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks due to strong demand in EU export markets. Domestic consumption and investment fueled strong GDP growth, but led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania''s Romania's widespread poverty. Corruption and red tape continue to permeate the business environment. Inflation rose in 2007-08, driven by strong consumer demand, high wage growth, rising energy costs, a nation-wide drought, and a relaxation of fiscal discipline. As a result of the increase in fiscal and current account deficits and the global financial crisis, Romania signed on to a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. Worsening international financial markets, as well as a series of drastic austerity measures implemented to meet Romania''s obligations under the IMF-led bail-out agreement contributed to a GDP contraction of 6.6% in 2009, followed by a 1.1% GDP contraction in 2010. The economy returned to positive growth in 2011 due to strong exports, a better than expected harvest, and weak domestic demand. In 2012, however, growth slowed to less than 1%, partially due contracted from 2009 to slackening export demand and an extended drought that resulted in an exceptionally poor harvest. 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability. The In September 2013, the Romanian authorities and the IMF/EU agreed to a follow-on stand-by agreement, worth $5.4 billion, to continue with reforms, although Bucharest announced that they do it does not intend to draw funds under the agreement. Economic growth accelerated in 2013, driven by strong industrial exports and an excellent agricultural harvest; in December 2013 inflation dropped to a historical low annual rate of 1.6%; and the current account deficit was reduced substantially. Yet, progress on structural reforms is uneven and the economy still is vulnerable to shocks.

Romania, which joined the EU on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession due to strong demand in EU export markets. Domestic consumption and investment fueled strong GDP growth, but led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment. As a result In the aftermath of the global financial crisis, Romania signed on to a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. lenders, but GDP contracted from 2009 to until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability. In September 2013, the Romanian authorities and the IMF/EU agreed to a follow-on precautionary two-year stand-by agreement, worth $5.4 billion, to continue with reforms, although Bucharest has announced that it does not intend to draw funds under the agreement. Economic growth accelerated rebounded in 2013, driven by strong industrial exports and an excellent agricultural harvest; in December 2013 inflation dropped to a historical low annual rate of 1.6%; harvest, and the current account deficit was reduced substantially. Yet, The economy closed out 2014 with 2.8% growth, down from the 3.5% posted in 2013. Industry outperformed other sectors of the economy. Exports remained the engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. In 2014, the Government of Romania succeeded in meeting its annual target for the budget deficit, the external deficit remained low, and inflation was the lowest since 1989, allowing a gradual loosening of the monetary policy throughout the year. However, progress on structural reforms is has been uneven and the economy still is vulnerable to external shocks. An ageing population, weak domestic demand, tax evasion, and insufficient health-care represent the top vulnerabilities.

Romania, which joined the EU on 1 January 2007, began the transition from Communism communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment.
In the aftermath of the global financial crisis, Romania signed on to a $26 billion emergency assistance package from the IMF, the EU, and other international lenders, but GDP contracted until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by standby agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability. stability; no funds were drawn. In September 2013, Romanian authorities and the IMF/EU agreed to a follow-on precautionary two-year stand-by standby agreement, worth $5.4 billion, to continue with reforms, although Bucharest has announced that it does not intend to draw reforms. This agreement expired in September 2015, and no funds under were drawn. Progress on structural reforms has been uneven, and the agreement. economy still is vulnerable to external shocks.
Economic growth rebounded in 2013, 2013-15, driven by strong industrial exports and an excellent agricultural harvest, harvests, and the current account fiscal deficit was reduced substantially. The economy closed out 2014 with 2.8% growth, down from the 3.5% posted in 2013. Industry outperformed other sectors of the economy. economy in 2015. Exports remained the an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was a second driver, due to the mid-2015 cut, from 24% to 9%, of the VAT levied upon foodstuffs. In 2014, 2015, the Government government of Romania succeeded in meeting its annual target for the budget deficit, the external deficit remained low, and inflation was even if it rose due to increasing imports. For the lowest first time since 1989, inflation turned into deflation, allowing for a gradual loosening of the monetary policy throughout the year. However, progress on structural reforms has been uneven and the economy still is vulnerable to external shocks. period.
An ageing aging population, weak domestic demand, significant tax evasion, and insufficient health-care represent health care, and an aggressive loosening of the fiscal package jeopardize the low fiscal deficit and public debt and are the economy's top vulnerabilities.

Romania, which joined the EU on 1 January 2007, began the transition from communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment.
In the aftermath of the global financial crisis, Romania signed a $26 billion emergency assistance package from the IMF, the EU, and other international lenders, but GDP contracted until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary standby agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability; no funds were drawn. In September 2013, Romanian authorities and the IMF/EU agreed to a follow-on standby agreement, worth $5.4 billion, to continue with reforms. This agreement expired in September 2015, and no funds were drawn. Progress on structural reforms has been uneven, and the economy still is vulnerable to external shocks.
Economic growth rebounded in 2013-15, the 2013-16 period, driven by strong industrial exports and excellent agricultural harvests, and the fiscal deficit was reduced substantially. Industry outperformed other sectors of the economy in 2015. 2016. Exports remained an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was a second driver, due to the mid-2015 cut, from 24% to 9%, of the VAT levied upon foodstuffs. In 2015, the government Government of Romania succeeded in meeting its annual target for the budget deficit, the external deficit remained low, even if it rose due to increasing imports. For the first time since 1989, inflation turned into deflation, allowing for a gradual loosening of monetary policy throughout the period.
An aging population, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package jeopardize the low fiscal deficit and public debt and are the economy's top vulnerabilities.

Romania, which joined the EU on 1 January 2007, began the transition from communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment.
In the aftermath of the global financial crisis, Romania signed a $26 billion emergency assistance package from the IMF, the EU, and other international lenders, but GDP contracted until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary standby agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability; no funds were drawn. In September 2013, Romanian authorities and the IMF/EU agreed to a follow-on standby agreement, worth $5.4 billion, to continue with reforms. This agreement expired in September 2015, and no funds were drawn. Progress on structural reforms has been uneven, and the economy still is vulnerable to external shocks.
Economic growth rebounded in the 2013-16 2013-17 period, driven by strong industrial exports and exports, excellent agricultural harvests, and the and, more recently, expansionary fiscal deficit was reduced substantially. policies in 2016-2017 that nearly quadrupled Bucharest’s annual fiscal deficit, from +0.8% of GDP in 2015 to -3% of GDP in 2016 and an estimated -3.4% in 2017. Industry outperformed other sectors of the economy in 2016. 2017. Exports remained an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was a second the major driver, due to the mid-2015 cut, from 24% tax cuts and large wage increases that began last year and are set to 9%, of the VAT levied upon foodstuffs. In 2015, the Government of Romania succeeded continue in meeting its annual target for the budget deficit, the external deficit remained low, even if it rose due to increasing imports. For the first time since 1989, inflation turned into deflation, allowing for a gradual loosening of monetary policy throughout the period.
2018. An aging population, emigration of skilled labor, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package jeopardize the low fiscal deficit compromise Romania’s long-term growth and public debt economic stability and are the economy's top vulnerabilities.

Romania, which joined the EU on 1 January 2007, began the transition from communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment.
In the aftermath of the global financial crisis, Romania signed a $26 billion emergency assistance package from the IMF, the EU, and other international lenders, but GDP contracted until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary standby agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability; no funds were drawn. In September 2013, Romanian authorities and the IMF/EU agreed to a follow-on standby agreement, worth $5.4 billion, to continue with reforms. This agreement expired in September 2015, and no funds were drawn. Progress on structural reforms has been uneven, and the economy still is vulnerable to external shocks.
Economic growth rebounded in the 2013-17 period, driven by strong industrial exports, excellent agricultural harvests, and, more recently, expansionary fiscal policies in 2016-2017 that nearly quadrupled Bucharest’s annual fiscal deficit, from +0.8% of GDP in 2015 to -3% of GDP in 2016 and an estimated -3.4% in 2017. Industry outperformed other sectors of the economy in 2017. Exports remained an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was the major driver, due to tax cuts and large wage increases that began last year and are set to continue in 2018.
An aging population, emigration of skilled labor, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package compromise Romania’s long-term growth and economic stability and are the economy's top vulnerabilities.

high-income EU member high-income, EU-member economy; joined Schengen area as of March 2024; euro membership delayed over convergence criteria; macroeconomic indicators; persistent inflation inflation, but recovery driven by consumption and EU-funded investments; investments driving recovery; skilled labor shortage; regional economic disparities; high public debt and budget deficit; challenges include fiscal reforms to address rising deficits sustainability and political instability