Romania has the potential to increase its economy four times in the next 20 years and become one of the top 10 economies of the European Union, according to the Foreign Investors Council (FIC), an organization that represents some 125 multi-national companies with EUR 35 billion investments in the country.

Romania is currently only the 17th economy in the European Union by the size of its gross domestic product (GDP). Romania’s GDP was little over EUR 160 billion, in 2015. Austria is currently the 10th economy in the EU, with a GDP of EUR 340 billion. To get to top 10, Romania should also surpass other developed economies such as Denmark, Ireland, and Finland, as well as Portugal, Greece, and the Czech Republic.

However, the foreign investors believe that Romania can make it to number 10 if it focuses on three key pillars for investment and reform and applies a proper governance framework for the implementation of a long-term plan.

“Romania's economy would grow to EUR 655 billion in 2036, equivalent to an increase fourfold in size than today. The FIC community is aware that many things are to be done but we consider that three pillars are key: modern infrastructure, demography and human capital, public and private efficiency. Efforts should be focused in order to provide the basis for sustainable long term growth. These three pillars are actually the three components of the production function: capital, labor, and productivity,” reads a FIC statement.

According to FIC, it is crucial for Romania to make a qualitative leap so that it can grow at an average rate of about 4% per year, over a period of 20 years. “Economic growth may accelerate from 3.3% - this is currently the potential growth rate - up to a maximum of 4.5% towards the end of the period.”

“Since joining the European Union, Romania lacks a well-defined ambition. The current growth rate, though encouraging, is not sustainable in the long term in the absence of a strategic approach,” FIC members believe. “This is the right time for citizens, civil society, business, academia and politicians to engage in a constructive dialogue about a long-term plan for Romania. Such plan must be endorsed by society at large and supported by all relevant stakeholders.”

FIC has launched a dialogue platform called VA URMA (To be continued) to stimulate a debate in Romania about the national ambition and the governance framework for a long term strategy. The organization encourages local companies to use the platform and share their expertise on long-term plans and strategies with public institutions.

Romania is the 7th country in the EU in terms of population and 9th in terms of area, but is second-to-last for GDP per capita.

Update: The calculation presented by FIC is inexact as a 4% average yearly growth rate would only result in a 2.2 times increase of the GDP in 20 years, to EUR 350 billion. In order to have the GDP increase fourfold in the next 20 years, Romania should have an average yearly growth rate of 7.2%.

Romania’s economic growth accelerates to 6% in the second quarter

editor@romania-insider.com