The net inflows of foreign direct investments (FDI) in Romania increased by 9.5% y/y to nearly EUR 6.9 billion in 12 months to September 2024, while the new equity FDI surged by 50% y/y to over EUR 2.8 billion – a record for the past five years, according to data published by the National bank of Romania (BNR).

Overall, the FDI to GDP ratio remains moderate, 2.0% of GDP to be revised downwards after Q3 GDP is published. It thus covered just over a quarter of the current account (CA) deficit in the 12-month period ending September.

When it comes to the new equity FDI, the quality of such investments matters as well. The classic example of the massive foreign investments in retail versus food processing and the impact of such a model on the trade balance best describes the situation when even large amounts of FDI fail to generate sustainable growth. 

Similarly, the government is striving to stimulate with grants the investments in production capacities able to capture the surge in the number of real renewable energy and real estate projects that generate significant volumes of imports. 

Local manufacturing of PV panels, energy storage batteries is in its infancy, while even the production of construction materials covers only part of the domestic demand and a small part for such categories of high-value-added goods. 

iulian@romania-insider.com

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