Weak investment profile: Romania’s direct investment abroad declines and remains the lowest in Europe

Romanian investors made total direct investment of EUR 622.5 million in other countries until the end of last year, down 1.5 percent compared to December 2017 and the lowest level since September 2015, National Bank of Romania (BNR) data show. Romania remains the smaller international investor in Europe.

In December 2017, foreign direct investments (FDI) abroad of Romanian residents amounted EUR 631.9 million. Data do not include investment of central bank.

Romania is a very small investor abroad even compared with its neighbors, as local investors prefer to focus on the local market or don’t have enough capital to expand abroad.

According to “World Investment Report 2018” released by United Nations Conference on Trade and Development (UNCTAD), Romania’s FDI outward stock amounted USD 883 million in December 2017, the lowest value among the 28 EU member states, far below Hungary (USD 28.6 billion), Poland (USD 31 billion), Czech Republic (USD 23.7 billion), Estonia (USD 7.7 billion), Slovenia (USD 6.9 billion), Croatia (USD 6 billion) or Bulgaria (USD 2.8 billion).

The outward FDI stock is the value of the resident investors’ equity in and net loans to enterprises in foreign economies, according to the Organization of Economic Cooperation and Development (OECD), which sets the international standard of FDI.

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Foreign direct investment is an investment in a business by an investor from another country for which the foreign investor has control – owning 10 percent or more of the business – over the company purchased.

Official data show foreign investors made total direct investment of EUR 81.6 billion Romania until the end of 2018, an all-time high, up 7.6 percent (EUR 5.77 billion) from December 2017.

At the end of 2017, the main countries of origin of FDI in Romania were the Netherlands (25.9 percent), Germany (12.8 percent), Austria (12.6 percent), Italy (6.2 percent), and France (6.2 percent), according to the central bank.