Following weeks of protests against corruption and the austerity policies imposed by the IMF, the World Bank and the EU as a condition for a €20bn rescue loan followed by a €5bn standby credit, the Cabinet led by PM Emil Boc resigned on 6^th of January 2012 making room for a new government team led by Mihai-Razvan Ungureanu.

The new PM and his team took office after receiving the Parliament’s vote of confidence on Thursday, 9^th of January.  A polyglot historian by formation and an Oxford graduate, Mihai-Razvan Ungureanu was designated by President Traian Basescu to lead the new team with a fresh image, so that the measures agreed with the IMF could be accomplished while simultaneously preparing Romania for local and parliamentary elections due later this year. In order to take on this role, Mihai-Razvan Ungureanu resigned as head of Foreign Intelligence Service, a position he had occupied since 2007. Prior to this, Mihai-Razvan Ungureanu had been Romania`s Ministry of Foreign Affairs since 2004.

The consequences of the economic measures have, no doubt, been one of the main reasons of the change of government in Bucharest. Still, the question remains: how does the Romanian economy look like at the moment? Here are a few figures and estimates.

The European Bank for Reconstruction and Development (EBRD) estimated that Romania’s GDP had grown by 2.5% in 2011 instead of 1% as previously estimated. Given the broader economic situation in Europe, the European Bank of Reconstruction and Development cut its forecast for the region and estimated that Romania’s GDP for 2012 would grow somewhere between 1.1% and 0.8%. The IMF forecast too at the end of their latest mission in January that Romania’s GDP this year will grow by  a maximum of 2.0%.

The annual inflation rate dropped to 3.14% in December, from the 3.44% recorded in November, and the National Bank of Romania (NBR) projected an annual inflation rate of 3% for 2012.

Romania’s budget deficit narrowed to 4.35% of GDP in 2011 from 6.5% of GDP in 2010, below the 4.4% target set for 2011.

Romania is maintaining its position as a leader concerning the interest rate cuts in emerging markets. At the end of January the Central Bank reduced its benchmark interest rate for the third time, taking it down 25 basis points to a record low of 5.5%.

As stated by Balkans.com, there are voices, like representatives of Investment Company Franklin Templeton Emerging Markets and Proprietatea Fund (FP), considering that Romania’s economy could be the first to emerge from the European crisis with strong economic growth. Fitch upgraded Romania from BB+ to BBB-, whereas most EU member states were harshly downgraded. Another encouraging reaction comes from Jeffrey Franks, the IMF head of mission for Romania, who declared last week that the IMF projected growth of 1.5% to 2.0% and stressed that despite the adjustment, dictated by the broader evolution in the EU, Romania’s economy will still perform better than the EU average.

Good news is coming from the foreign investment sector too as Bloomberg reported last week that Germany’s Robert Bosch, the world’s biggest car parts supplier,  plans to invest about €77m ($101 m) in a new factory near Cluj-Napoca in North Western Romania, close to where Nokia closed a showcase plant last year.

Despite the tough measures that have been implemented, Romania seems to be on a good trend, unless the situation in the EU deteriorates seriously. But even in this case, Jeffrey Franks, the IMF head of mission for Romania, thinks that Romania’s economy will perform better that the EU average.

Having said this, a bit of courage seems to be the missing element. For those interested in expanding their business abroad and considering Romania as a potential destination, here there are a few sectors you could look at: Agriculture, Tourism, Infrastructure, Energy and Financial Services.

For those interested in discovering opportunities in Agriculture, Tourism and Energy, The British Romanian Consultancy is organizing in cooperation with Calarasi Chamber of Commerce, Agriculture and Industry a trade mission to Calarasi County in May 2012. More details could be found here

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• Did you know that the real Count Dracula was a military leader who fought the Turks in the Middle Ages?  Dracula the Vampire was invented by an Irish author, Bram Stoker.

• Did you know Romania is roughly the same size as the UK, but its population is only one third as large?

• Did you know Romania is the second largest consumer market in Central and Eastern Europe after Poland, together with its neighbours being part of a market of 100m inhabitants?

• Did you know there are more than 4,400 British businesses operating in Romania with a capital worth more than €2,4bn?

• Did you know the best fields to invest in Romania are: Agriculture, Tourism, Energy and the Financial Sector?

• Did you know Romania is the gateway to Caucasus region, the Middle East and the Western Balkans and that it has a major shipping port on the Black Sea?

• Did you know the UK ranks 8 in the top 10 countries investing in Romania behind Holland, Austria, Germany, Cyprus, France, Italy and Spain?

• Did you know Romania has available funds and fiscal incentives to encourage foreign investment?

• Did you know Romania has a very well qualified and predominantly English speaking labor force?

If you are interested to discover some of the opportunities in the Agriculture, Tourism and Energy, join our trade mission to Calarasi County in May 2012. You can find out more details here.

Please feel free to ask questions and comment.

Stay tuned for our first post:” 10 facts you did not know about Romania”.