The inflows of Foreign Direct Investments (FDI) in Romania in 2018 increased by a mere 2.6% compared to 2016, to EUR 4.9 billion, to hit the post-crisis maximum. In 2008, before the recession, the FDI level was nearly twice as high: EUR 9 billion.

Furthermore, the GDP was only EUR 146 billion in 2008, compared to EUR 190 billion in 2018, which results in a significant decrease of the FDI to GDP ratio to just 2.6% in 2018, less than half the 6.2% figure in 2008, local Ziarul Financiar reported.

At the same time, with the rise in the stock of FDI, side effects have intensified: the outflows generated by the FDI enterprises (dividends given to foreign owners) increased to the point where they surpassed the inflows of new FDI: in 2018, the outflows were nearly EUR 8.4 billion, after they have gradually increased from around EUR 5 billion during 2008-2015.

Part of what central bank reports as FDI represents reinvested earnings of FDI investors already running businesses in the country. The central bank does not provide sufficient data to estimate the share of reinvested earnings in the total equity foreign investments (EUR 3.15 billion in 2018).

editor@romania-insider.com

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