United Nations Development Programme
Romania
 

Country profile

Romania, which joined the European Union on 1 January 2007, is the 22nd largest economy in Europe (and the 17th in the EU) by total Gross Domestic Product (GDP). Going through the most severe recession in two decades, Romania is relying on a 20 billion Euro package in loans from the International Monetary Fund (IMF) and the European Commission to finance its deficit.

Romania began to feel the effects of the global downturn in financial markets and trade in the last quarter of 2008. In 2009, the GDP fell more than 7 percent, prompting the Government to seek an emergency assistance package from the IMF, the EU and other international lenders. In 2010, drastic austerity measures were implemented as part of IMF-led agreement, and a further 1.9% contraction of the GDP was registered. The economy is expected to return to growth in 2011.

Basic country data

Total area: 238,391 sq. km (11th largest in Europe and 79th largest worldwide)
Population: 21,462,000 (Jan. 2010)
Capital: Bucharest, 1,944,451 population
Main cities, above 300,000 population: Brasov, Cluj-Napoca, Constanta, Craiova, Galati, Iasi, Timisoara
Currency: Leu=100 bani; the plural of Leu is Lei.
Exchange rate:

Economic Outlook and Forecast

Before the global economic recession, Romania enjoyed almost a decade of steady economic growth, thanks to a strong demand in EU markets. Domestic consumption and investments have fueled strong GDP growth, but have also led to a widening account deficit. From the 2008 great economic expansion, when a credit-fuelled consumption made Romania the EU’s fastest-growing economy, the country plunged into recession in 2009 when the GDP fell by more than 7%. This prompted the Government to seek multilateral support, including from the IMF, the European Commission and the World Bank Group. The international community agreed to support the reforms committed to by the Romanian government with a package totaling EUR 19.95 billion over the period 2009-2010. Austerity measures were implemented through 2010, yet the GDP contracted by another 1.9% in the same year. Nevertheless, the country’s fiscal performance to date sends encouraging signals with respect to resumed growth in 2011. Analysts forecast a growth in GDP of 1.5% in 2011, followed by a growth of 4.4% in 2012.

Central Bank Governor: Mugur Isarescu

Economic Data


Economic Data

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
forecast

GDP per head (Euro)

1,795

2,002

2,221

2,316

2,806

3,676

4,501

5,938

6,501

5,611

5,903

6,400

GDP per head ($ at PPP)

5,663

6,127

6,734

7,200

7,561

8,439

9,045

9,927

12,001

11,013

11,203

11,700

Economic Growth (% GDP change)

2.1

5.7

4.9

4.9

8.5

4.1

7.7

6.3

7.3

-7.1

-1.9

1.5

Government consumption (% of GDP)

7.21

6.66

6.07

6.53

7.75

 9.18

11.6

12.3

12,3

12,3

12.9

N/A

Budget balance (% of GDP)

-4.01

-3.22

-2.62

-2.5

-1.49

-0.78

-1.65

-2.5

-3.9

-8,3

-7.8

-6.4

Consumer prices (% change per year)

45.67

34.47

22.54

15.4

11.9

9

6.56

4.84

4.16

5.6

5.9

5.2

Public debt (% of GDP)

31.22

27.05

27.61

25.7

27.9

28.8

29.1

21.8

13.4

23.9

40.1

40.0

Labour costs per hour (USD)

0.56

0.58

0.64

0.8

1.96

2.6

2.9

3.2

3.8

4.2

4.7

N/A

Recorded unemployment (%)

10.5

8.6

8.1

7.2

6.3

5.9

5.6

4.3

3.9

6.3

9.0

7.5

Current-account balance (% GDP)

-3.66

-5.55

-3.33

-5.9

-5.2

-8.9

-10.6

-13.9

-10

-4.4

-5.5

-6.0

Foreign-exchange reserves (mUS$)

5,442

7,211

8,655

13,472

20,890

26,739

27,231

39,956

39,468

28,300

32,4300

N/A

* Billion €
* Source: INS (Institute of National Statistics), IMF and World Bank
* 2011 IMF forecast

Economic highlights

  • Inflation: The inflation rate rose to 8 percent in December 2010, more than double the 3.4 percent forecast. IMF predicts that inflation will average 5.2% in 2011.
  • Budget Deficit: The administration plans to narrow the budget deficit to 4.4% GDP, in 2011, compared to the 7.8% in 2010, in line with its international borrowing agreements. In December 2010, Romania's parliament approved an austere budget for 2011 that will allow for these budgetary cuts.
  • Structural Reform: The authorities are making progress on reforms of the labor market and of the social benefits system, which will improve its targeting and help mitigate the impact of the austerity package, approved in July 2010.
  • Unemployment: As key reforms in public sector are advancing and a unified wage law for the public sector was approved, the unemployment rate has begun to stabilize. At the same time, the creation of new jobs in the private sector is more difficult. Unemployment will be around 7% in 2011 (i.e., the lowest in the region in all three years), according to the IMF’s forecast.
  • Exports: With consumer confidence and economic sentiment gradually improving and export-oriented industry continuing to grow, recent indicators suggest growth will turn positive early in 2011.

Human Development Indicators*


Human Development Indicators

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Human Development Index (HDI)

0.752

0.770

0.772

0.775

0.773

0.778

0.792

0.805

0.811

0.813

0.765

0.764

0.767

Life expectancy at birth (years)

69,9

70,2

69,8

69,8

70,5

70,5

71,3

71,5

71,8

71,9

73,2

73,2

73,4

Adult literacy rate (% ages 15 and older)

97,8

97,9

98

98,1

98,2

97,3

97,3

97,3

97,3

97,4

98

98,3

98,3

Gross enrollment ratio for schools

68

70

69

69

68

68

72

75

76,8

77

79,2

79,2

79,2

GDP per capita (PPS US$)

4,310

5,648

5,663

6,127

6,734

7,200

7,561

8,439

9,045

9,927

12,001

11,013

11,203

Life expectancy index

0,75

0,75

0,75

0,75

0,76

0,76

0,77

0,78

0,78

0,81

0,81

0,81

0,82

Education Index

0,88

0,88

0,88

0,88

0,88

0,88

0,89

0,9

0,9

0,91

0,91

0,92

0,91

GDP Index

0,63

0,67

0,68

0,69

0,68

0,7

0,72

0,74

0,752

0.758

0,771

0,783

0,798

*Source: UNDP Human Development Report

In the 2010 global Human Development Report featuring a 1970-2010 HDI trends analysis, identifying ‘top mover’ countries that have improved most in HDI terms over the past 40 years, Romania promoted from the Middle to the High Human Development Category, ranking 51st in terms of human development.

Legal system

Parliamentary Republic: following the socio-economic and political changes in 1989, a new Constitution was adopted in 1991 and subsequently amended in 2003.

National legislature

Bicameral 471-seat Parliament composed of the Senate (137 seats) and the Chamber of Deputies (334 seats). Both chambers are directly elected from 41 multimember constituencies, comprising 40 counties and the Municipality of Bucharest.

Parliamentary political parties

Democratic Liberal Party (PDL);
National Liberal Party (PNL);
Social Democrat Party (PSD);
Democratic Alliance of Hungarians in Romania (UDMR);
Conservatory Party (PC);
National Union for Progress in Romania (UNPR)

Electoral system

Universal direct suffrage over the age of 18.

National elections

Legislative elections were held in Romania on 30 November 2008. The first round of 2009 Romanian presidential elections was held on 22 November, and a second one on 6 December. Next parliamentary and presidential elections are due in 2012 and 2014, respectively.

Head of state

President: Traian Basescu.

National government

Cabinet, headed by the Prime Minister, nominated by the President and endorsed by the Parliament. The current government is a coalition of the Democratic Liberal Party (PDL) and the Democratic Alliance of Hungarians in Romania (UDMR).

Prime Minister: Emil Boc (PDL)
Deputy Prime Minister: Markó Béla (UDMR)

Cabinet as of 1 January 2011


Last Updated January 2011

Page last updated on 09/04/2011
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