FIC members confidence in Romanian economy is low, despite majority expectations of growing income

The latest figures of the Foreign Investors Council (FIC) members’ perceptions on business environment in Romania confirm the significant decrease in confidence registered in 2017 despite the fact that 54 percent of respondents expect their income to grow this year.

More than 70 percent of respondents say that the developments in the last 6 months have lowered their confidence in the business environment in Romania and believe that it has deteriorated.

According to FIC shows that there are a number of structural constraints that do not encourage new investments:

68 percent of respondents consider that the available workforce is not competitive enough
85 percent of respondents characterize the Romanian tax system as uncompetitive
96 percent of respondents say they are experiencing difficulties due to the burdens of regulations that are unclear and constantly changing
92 percent believe that infrastructure is not well developed, which is no longer a surprise to anyone
100 percent of respondents describe bureaucracy in Romania as being uncompetitive compared to other locations in Europe where they carry out activities
100 percent complains about the lack of transparency and consistency in the adoption and implementation of public policies

Foreign investments in Romania have reached EUR 4.5 billion in 2017 in very slight growth compared to 2015 or 2016 and yet only half of the level recorded in 2007-2008. In the first six months of this year, the foreign investments increased with 29.4 percent compared with the same period of last year, to EUR 2.19 billion.

Despite the growth, a recent World Bank analysis shows that foreign investment attracted by Romania in 2016 accounted for only 2.8 percent of GDP, while in Eastern Europe the flows were around 8 percent of GDP for the same period.

The FIC message for political decision-makers is that as long as the perception of business perceptions in Romania suggests rather mistrust, the chances of attracting new significant investments are minimal.

According to FIC, with a low level of public policy confidence, it is unlikely that Romania will attract new investment in areas still high in unemployment, in key sectors such as utilities or in public-private partnership projects that government representatives are trying to conclude in the next period.