Greenfield investment monitor fDi Markets has recorded year-on-year decline in foreign direct investment into Romania over a five-year period between 2011 and 2015. Since a peak in 2011 of 181 recorded projects, project numbers have plummeted to 143 in 2012 and have been on a downward trend ever since. In 2015 only 112 projects were recorded, a 38.12% decline in numbers over the five-year period. From January 2011 until December 2015, a total of 705 projects have been recorded, corresponding to a capital investment of $36.26bn and the creation of 198,518 jobs.
In terms of job creation, the country has experienced a 33.38% drop, from 51,722 jobs in 2011 to 34,454 in 2015, recording a slight recovery from the previous low in 2014 when only 28,306 jobs were created. This is reflected in the amount of capital expenditure per year, which declined from $10.93bn in 2011 to $3.62bn in 2015, a 66.9% drop.
The strongest city over the period has been Bucharest, with 186 recorded projects in total, representing a market share of 26.38% of total FDI into the country ahead of Cluj-Napoca with 43 projects and a market share of 6.10% and Timisoara with 36 projects and a market share of 5.11%.
The top investment source in terms of project numbers has been Germany with 111, a 15.74% market share. In second place is the US with 97 projects and a market share of 13.76%. The UK is in third place with 63 projects and a market share of 8.94%, followed closely by France with 59 projects and a market share of 8.37%. Out of the four top ranking source countries, France has recorded the sharpest decline in investment into Romania with a drop of 79.17% from 24 projects in 2011 to only five in 2015. Investment from Germany into Romania has fallen 30% drop from 30 projects in 2011 to 21 in 2012, from which it has not been able to recover thus far.
The strongest sector over the five years has been software and IT services with 94 projects in total, recording a gradual increase in project numbers until 2015 in contrast with the general FDI trend. Even though project numbers levelled off at 14 to 15 in the first three years, an increase in FDI projects in software and IT has been recorded between 2014 and 2015, from 14 projects to 28. Automotive components followed in second place with 76 projects, albeit as part of an unpredictable FDI inflow, fluctuating between 11 and 20 projects during the five-year period. Third place was claimed by the alternative/renewable energy sector with a total of 59 projects between January 2011 and December 2016, although the sector has seen a sharp decline from 25 projects in 2011 to none at all in 2015.
Between January and August 2016, Romania recorded 73 projects, a capex of $2.7bn, and the creation of 28,523 jobs. Numbers have declined by 17.74% compared to the 62 recorded projects during the same period in the previous year. Compared to the investment high in 2011, with 90 projects recorded only in the first half, the numbers have fallen by 43.3%. With a strong July and August 2016, which recorded 22 projects already compared with 20 projects in the whole third quarter of 2015, there is a chance that Romania could escape the downward spiral, but for now the trend is likely to continue.
Despite its declining FDI, Romania came in on third place in emerging Europe in terms of project numbers, claiming 705 projects and a market share of 10.38%. However the gap between Poland, in second place with 1072 projects and a market share of 15.82%, is wide. Even though all top three destination countries in emerging Europe, including Russia in first place, have recorded a decline in project numbers during the five-year period, the downward trend only seems to be continuing for Romania, given that both Russia and Poland were able to recover in 2015 from an investment low in 2014.