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Economy and business in Romania

According to COUNTRYAAH, Romania has a business sector where the service industries mean the most to both value creation and employment. Then comes the secondary industry and the primary industry agriculture. In ancient times, Romania was primarily an agricultural country with significant grain exports. Today, agriculture means less for the overall economy. But compared to most other European countries, many are still working in agriculture.

Business of Romania

Some of the agriculture is modernized, while there are very many small farms where productivity is low and partly characterized by self-storage. Romania also has large forest areas. Part of the timber goes to export.

The industry is varied and means a lot to the overall economy. Before the Second World War, the industry was of modest size, but still with some well-developed industries, which was also linked to the fact that the country before World War I was one of the most important oil-producing countries in the world.

During the communist period from 1947 to 1989, the business community was socialized with state planning economics and extensive industrialization, with a heavy emphasis on heavy industry. Agriculture was collectivized. In the 1980s, the Romanian economy faced serious problems due to mis investments and a forced repayment of foreign debt. When the communist dictator Nicolae Ceaușescu was overthrown in 1989, the country therefore had a poor economic starting point.

In the 1990s, the centralized planning economy was replaced by a market economy. Much of the old industry proved unprofitable in the new market situation and was eventually closed down. The social costs of these changes were high. Gross domestic product (GDP) declined, and it was not until the 2000s that it became larger than it had been in the communist era. Growth in the 2000s was boosted by Romania's membership of the EU (2007). With the international financial crisis of 2008, a new decline followed. From 2013, there has been some growth in the gross domestic product. The annual growth rate from 2013 to 2018 was between three and seven per cent. Korona Virus pandemic by 2020, this growth has halted for the time being. Forecasts from the International Monetary Fund (IMF) in April 2020 projected a 5 percent decline in 2020. In May 2020, the European Commission projected a 6 percent decline in Romania's GDP in 2020, but underlined the uncertainty of the forecast.

In 2018 was the gross domestic product of 239 billion USD. Per capita, it was $ 12,301. Calculated by purchasing power parity (PPP), it was $ 28,206. The registered unemployment rate was 4.9 per cent in 2017. This figure must be seen in the context of an increasing number of Romanians who did not find work in their home country after the restructuring of the business community, moving permanently or temporarily abroad to seek work there, a development that accelerated after Romania's EU membership in 2007.

Agriculture, forestry, fishing

The contribution from the primary industries agriculture, forestry and fishing to the gross domestic product in 2018 was four per cent. The importance of employment is far greater. In 2017, 21 per cent of employed persons worked in the primary industries, and then in agriculture. Although the proportion is still large in the European context, it has also declined sharply in Romania, from 74 per cent in 1950, 49 per cent in 1970 and 33 per cent in 1996.

Agriculture

Conditions are well facilitated for agriculture in Romania. The country has the fifth largest agricultural area in the EU, but productivity is among the lowest in the EU. Of the country's total area, 57 percent is agricultural land. Of the agricultural area, 64 per cent are cultivated land, 22 per cent pasture, 11 per cent meadow and 3 per cent vineyards and fruit area (2014).

About two-thirds of the arable land is used for grain (2017: 63 per cent), most for maize (29 per cent) and wheat (25 per cent). In 2017, 14.3 million tonnes of maize, 10.0 million tonnes of wheat and 1.9 million tonnes of barley were grown. Romania is one of the world's ten leading grain export countries, both wheat and maize. Also roots and tubers are important, especially potatoes with a production of 3.1 million tonnes in 2017. Likewise player oil plants a significant role. In recent years there has been great progress for sunflower, rapeseed and soy. By legumes grown the most peas and prayers. Vegetables are grown especially around the big cities. Romania has long traditions when it comes to viticulture. On the southern and eastern slopes of the Carpathians and in Transilvania a great deal of wine and fruit, especially apples and plums, is grown. Plums are used, among other things, for liquor production (icuică). The production of wine is also large on a global scale, with the country ranked 13th with an annual production of 5.1 million hectoliters in 2018. Animal husbandry plays an important role in the domestic market with cattle, sheep, pigs and chickens. Furthermore, there is a large export of live animals, both for cattle and sheep. Of agricultural land, 1.7 per cent is used for organic farming (2017).

There are erosion hazards in many places, and large areas may be exposed to drought. However, the use of artificial irrigation is limited. After 1989, the extensive irrigation facilities from the communist period lapsed due to lack of maintenance and thefts. Prior to 1990, 34 percent of the arable land was covered. Although EU support has been granted to restore the facilities, only 2.2 per cent of the arable land was covered in 2017.

Following the revolution in 1989, Romania has received a fairly sharp split between small and large units in agriculture, although there are also some medium-sized uses. On the one hand, the land can be said to have become a smallholding land after the land from the collective farms was privatized and returned to former owners, their heirs and to villagers who had worked on the collective farms without their families having been owners before. Also much of the land from the state farms was privatized, either to larger commercial units or to small farms. Romania has 3.3 million farms with an average size of 37 goals. That makes Romania the country with the most farms in the EU. About nine out of ten uses are below 50 targets. Often the small uses are split into several parcels which makes operations difficult. In many of the small farms, self-storage farms are practiced, where little goes on sale. There is a modest degree of mechanization, and horses are still used as traction in many places. In 2017, Romania had 213,000 agricultural tractors, which is one tractor per 440 acres (44 ha).

In the villages, the peasant population is often aging, while the young have sought better employment opportunities in the cities or abroad. Small farmers lack capital for investment in equipment and EU fundingis not intended for such farming. On the other hand, Romania today has many large utility units, and they mean a lot to production. Use over 500 targets accounts for 0.5 percent of all uses, but covers 51 percent of agricultural land. Many smaller uses have been acquired and merged, and international agricultural capital has entered the owner's side. This was also opened before Romania joined the EU in 2007, but membership has made conditions even better for such a development. The large and highly mechanized commercial uses need little labor compared to traditional family uses.

Forestry

The forest covers 28 percent of the country's area. Of this, 33 percent are beech forest, 29 percent bare forest and 17 percent oak forest (2018). Forestry matters most in the South Carpathians and in the northern East Carpathians, especially the Suceava county in southern Bukovina. Nearly two-thirds of the forest (64 percent) is in public ownership, most as state property (48 percent). According to official statistics, the harvest in 2018 was 19.5 million cubic meters. Romanian media and NGOs have proven that there is also a significant amount of illegal logging associated with corruption.

Fishing

Fishing means little to the overall economy and consists of fish farming (mostly carp, but also somewhat trout and sturgeon), freshwater fishing (rivers, especially the Danube Delta, and lakes) and fishing along the Black Sea coast. The former deep sea fishing fleet with activity in the Atlantic Ocean has been discontinued. Also much of the former fish farm in the Danube ponds has been decayed and discontinued. Today, Romania has one of the smallest fishing fleets in the EU. It is a coastal fleet consisting almost entirely of smaller boats.

The fish species that are most important for saltwater fishing are anchovies, sprat and turbot. In recent years, there has been increasing demand for food for the sea snail rapana venosa, an invasive predator species originally from the Far East and known along the Romanian coast from the 1960s. Initially, the trapping was done manually with scuba diving, but in 2013 trawling was allowed, which led to strong growth. In 2017, 9244 tonnes were landed.

Mining

Romania has a variety of energy sources, metallic ores and non-metallic minerals, but is not self-sufficient in mineral products. Petroleum is known in Romania from the 15th century. Commercial recovery on a larger scale began in the 19th century. Simple refineries were established from 1840, while one of the world's first modern refineries was built in R‚fov near Ploiești in 1857. Before World War I, Romania had the world's fourth largest crude oil production (after the United States, Russia and Mexico). The largest annual production was 15 million tonnes in the mid-1970s. Subsequently, it has been producing less and less and the country has become a net importer of oil. In 2017, crude oil production was 3.5 million tonnes, while imports were more than twice as high. The oil fields are scattered on the south and east sides of the Carpathians, as well as on the Romanian continental shelf in the Black Sea (production since 1987). Ploieşti is the country's traditional oil capital. The Romanian state oil company Petrom was privatized in 2004 with the Austrian OMV as its main shareholder.

Extraction of natural gas began in 1911. The gas is found partly at the oil fields, partly in pure methane gas fields in Transilvania and partly in the Black Sea. Production was 8.6 million tonnes of oil equivalent (toe) in 2017. The gas is piped to the cities, where it is used in households and industry.

Coal production in Romania started in the mid-1800s. Both coal and lignite have been mined. Production in 2017 was 4.5 million tonnes of oil equivalent (toe). The most important coalfields have been in the South Carpathians at Petroşani (Jiudalen) and Anina (near Reşiţa), the most important coalfields at T‚rgu Jiu (Rovinari and Motru) and Oradea. In the communist era, the mining industry was an industry that the authorities focused heavily on. Many new mines were opened. From the mid-1990s the industry has been characterized by closures with mass layoffs of workers. In practice, entire communities have been abandoned. In Jiudalen alone, the number of miners dropped from 45,000 to 20,000 in three years (1996–1999), a trend that has continued ever since. The production of iron ore declined sharply from the early 1990s and has now ceased. Most of it came from the Hunedoara area. Salt has been mined since Roman times. Today there are operations at Suceava, Turda and on the eastern and southern slopes of the Carpathians. Although Romania has long traditions of gold mining, there has been no production since 2006. There are plans for new operations. Extraction of lead, zinc and bauxite has been discontinued. Copper ore is still being mined at Abrud in Transilvania.

Energy

Romania has varied and significant sources of energy, but is not self-sufficient in energy. In 2018, 33 percent were imported. At the same time, energy consumption has over time developed differently than in many other countries, where growth has been the main trend. Because when much of the communist power-intensive large-scale industry was shut down in Romania from the 1990s, energy consumption declined so much that even with later growth it is still lower than in 1989. Electricity production was 64 TWh in 2017. 44 per cent was heat power based on fossil energy sources, primarily coal (26 per cent) and natural gas (17 per cent). Other energy sources for electricity generation were hydropower(23 per cent), nuclear power (18 per cent), wind power (12 per cent), in addition to smaller share of solar energy and biofuels. The country has significant hydropower resources, which in 2017 contributed 15 TWh. The total expandable potential is estimated at 36 TWh. The country's largest hydroelectric power station (joint Romanian-Serbian) is at the Iron Gate (Danube). From 1996, a nuclear power plant, built with Canadian assistance, was commissioned at Cernavodă, southeast of the country, it was expanded with a new nuclear reactorin 2007. In 2017, nuclear power plant production was 12 TWh. It has been planned for a long time that the power plant will be expanded with two new nuclear reactors, but it is not yet clear when that can happen. The development of wind power has particularly occurred in Dobrudja, southeast of the country.

Industry

The contribution from industry (including building and construction) to gross domestic product (GDP) in 2018 was 29 per cent. In 2017, 32 per cent of employed persons worked in these industries, of which 23 per cent in manufacturing and 8 per cent in construction. The most important industries in terms of employment (2017) are the textile, clothing and leather goods industry (including shoes) with 228,000 employees, the automotive industry with 183,000 employees, and the food, beverage and tobacco industry with 177,000 employees. Other important industries are plastics and minerals, metal and metal products, mechanical, wood and wood, furniture, and petrochemical, chemical and pharmaceutical industries. Romania also has a significant computer and electrical equipment industry.

Before the Second World War, the industry was modest, but still with some industries of importance such as the food, chemical, metallurgical, textile and wood industries. After World War II, the country had strong industrial growth with emphasis on heavy industry.

Following the collapse of the Communist regime in 1989, industrial production declined sharply, and many large companies were eventually closed down as a result of unprofitable and new market conditions, obsolete production equipment or problems related to privatization. While steel production in 1987 was 13.9 million tonnes and in 2003 5.7 million tonnes, in 2018 it was 3.6 million tonnes. Another example is cement production, which has seen a significant decline from 13.6 million tonnes in 1986 to 8 million tonnes in 2016. Cellulose production was traditionally an important industry, but the last plant was closed in 2009. An industry branch that started in collaboration with Western interests in the Communist era are the automobile industry. This industry has grown after the fall of communism and is today among the country's most important. Much goes for export. The largest factory is at Pitești with the car brand Dacia. Production started in 1968 under license from Renault. From 1999 Renault is the owner. The company has the highest turnover of all Romanian companies. In Craiova, cars have been produced in collaboration with CitroŽn since 1976 (car brand Oltcit), in 1994 Daewo took over. From 2008 Ford is the owner of the factory.

Service industries

The contribution from service industries to the gross domestic product in 2018 was 57 per cent. The proportion of the employed population working in these industries was 47 per cent in 2017. The trade industry then employed 1.2 million, the transport sector 456,000, the health and social sector 411,000, education 375,000.

Foreign Trade

About three quarters of Romania's foreign trade takes place with EU countries. The most important trading partners for exports are Germany (23 percent in 2017), Italy (11 percent) and France (7 percent). Romania imports most from Germany (20 percent, Italy (10 percent) and Hungary (8 percent). The most important export goods in 2017 were machinery and equipment, motor vehicles, textile products and footwear. The main import goods were machinery and equipment, motor vehicles, oil).

Transport and Communications

Most of both goods and passenger transport inland takes place on the roads. They have a variable standard. Although some freeways have been built, it is far from meeting the need for important regional thoroughfares. In 2018, it was 823 km of highway. The car fleet has grown rapidly since 1989, and in 2017 there were 6 million passenger cars.

A considerable part of the transport work is done by rail. The total length of the railway network is 10,774 kilometers, of which 37 per cent is electrified. 27 percent of the network has double slots. Air traffic plays a minor role for domestic traffic. The two largest airlines are TAROM and the low-cost carrier BlueAir. There are international airports in Bucharest, Constanţa, Timisoara, Iași and Cluj-Napoca, among others.

The Danube is an important transport year for Romania, even though it freezes in harsh winters, and traffic through the delta is made more difficult by silt. A channel between the Black Sea and the Danube at Cernavodă, opened in 1984, avoids the delta and shortens transport time. The main river ports are Galaţi and Brăila. Romania's largest port city is Constanţa on the Black Sea coast. The country has a well-developed pipeline network for transporting oil (3112 km) and gas (13 381 km).

Tourism

Important tourist destinations are the capital București, the seaside resorts on the Black Sea coast (including Mamaia and Eforie), southern Bukovina with famous monastery churches, the Danube delta, the mountain and valley regions of the South Carpathians, cities in Transilvania (Brașov, Cluj-Napoca and more). The number of foreign visitors to Romania in 2017 was 10.9 million. Most came from neighboring Moldova, Bulgaria, Hungary and Ukraine. The majority came from Western Europe from Germany and Italy. Also from Israel and the United States there are many tourists. The country has almost 8,000 accommodations with 344,000 beds. A quarter of these are on the Black Sea coast, a quarter in the capital and county capitals. The others are divided into health resorts, mountain areas, the Danube Delta and smaller places. In most categories, Romanians dominate as guests, but in the larger cities the proportion of overnight stays by foreigners is almost 40 per cent.

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