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Iulian Ernst
Senior Editor

Iulian studied physics at the University of Bucharest, and he sees himself as a physicist in the broadest sense of the word. He also studied economics at Charles University in Prague and Central European University in Budapest, after a master’s program in business administration at Bucharest Academy of Economic Studies. Since recently, he’s been exploring coding and data analysis for business and economics. As a freelancer, he worked for nearly two decades as an analyst for ISI Emerging Markets, Euromonitor International, Business New Europe, but also as a consultant for OMV Petrom and UkrAgroConsult. Iulian was part of the founding team of Ziarul Financiar. At Romania Insider, which he joined in 2018, he is reviewing the latest economic developments for the premium bulletins and newsletters. He would gladly discuss topics such as macroeconomics, emerging markets, Prague, energy sector including renewable, Led Zeppelin, financial services, as well as tech start-ups and innovative technologies. Email him at iulian@romania-insider.com. 

 

Covid accelerated the shift from FDI to Foreign Direct re-Investment in Romania

The foreign direct investments (FDI) in Romania, calculator over a 12-month rolling period (EUR 4.72 bln as of Jul-21), is returning to EUR 5 bln typical pre-crisis value - but its structure has shifted from new equity investments to reinvested earnings.

The two types of investments have remained in balance during 2018-2019, but the balance was broken in 2020, when fewer new investors showed up, and incumbent FDI companies had to retain a higher share of their earnings to finance their operations.

Thus, in the 12-month period as of July 2021, net equity amounted to under EUR 1.6 bln, compared to EUR 4.3 bln reinvested earnings, resulting in a ratio of 36.6%.

In 2015, the net equity investments amounted to EUR 3.1 bln, versus only EUR 0.66 bln reinvested earnings.

Roughly speaking, the two types of foreign direct investments were more or less at the same levels of EUR 2.5 bln to EUR 3.5 bln in 2018-2019.

While it remains unclear whether the equity investments will recover quickly after the covid crisis ends, it is visible that the incumbent FDI investors are playing a key role in the country’s balance of payments (BoP).

According to central bank data, the revenues derived by FDI investors in Romania, on a rolling 12-month period basis, have constantly and significantly increased from under EUR 3.8 bln in 2015 to nearly EUR 8.0 bln as of July 2021.

While in the beginning, the FDI investors were reinvesting only a small part of the revenues as new FDI, the pattern has changed, particularly in 2021. 

Another insight regards the permanent impact of the FDI investors, mediated by the outflows of incomes generated - some EUR 3.7 bln over the 12-month rolling period ending Jul-21. The figure has been constant or slightly higher (EUR 4 bln per year) over the period since 2015.

(Photo: Wanida Prapan/ Dreamstime)

andrei@romania-insider.com

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Profile picture for user iuliane
Iulian Ernst
Senior Editor

Iulian studied physics at the University of Bucharest, and he sees himself as a physicist in the broadest sense of the word. He also studied economics at Charles University in Prague and Central European University in Budapest, after a master’s program in business administration at Bucharest Academy of Economic Studies. Since recently, he’s been exploring coding and data analysis for business and economics. As a freelancer, he worked for nearly two decades as an analyst for ISI Emerging Markets, Euromonitor International, Business New Europe, but also as a consultant for OMV Petrom and UkrAgroConsult. Iulian was part of the founding team of Ziarul Financiar. At Romania Insider, which he joined in 2018, he is reviewing the latest economic developments for the premium bulletins and newsletters. He would gladly discuss topics such as macroeconomics, emerging markets, Prague, energy sector including renewable, Led Zeppelin, financial services, as well as tech start-ups and innovative technologies. Email him at iulian@romania-insider.com. 

 

Covid accelerated the shift from FDI to Foreign Direct re-Investment in Romania

The foreign direct investments (FDI) in Romania, calculator over a 12-month rolling period (EUR 4.72 bln as of Jul-21), is returning to EUR 5 bln typical pre-crisis value - but its structure has shifted from new equity investments to reinvested earnings.

The two types of investments have remained in balance during 2018-2019, but the balance was broken in 2020, when fewer new investors showed up, and incumbent FDI companies had to retain a higher share of their earnings to finance their operations.

Thus, in the 12-month period as of July 2021, net equity amounted to under EUR 1.6 bln, compared to EUR 4.3 bln reinvested earnings, resulting in a ratio of 36.6%.

In 2015, the net equity investments amounted to EUR 3.1 bln, versus only EUR 0.66 bln reinvested earnings.

Roughly speaking, the two types of foreign direct investments were more or less at the same levels of EUR 2.5 bln to EUR 3.5 bln in 2018-2019.

While it remains unclear whether the equity investments will recover quickly after the covid crisis ends, it is visible that the incumbent FDI investors are playing a key role in the country’s balance of payments (BoP).

According to central bank data, the revenues derived by FDI investors in Romania, on a rolling 12-month period basis, have constantly and significantly increased from under EUR 3.8 bln in 2015 to nearly EUR 8.0 bln as of July 2021.

While in the beginning, the FDI investors were reinvesting only a small part of the revenues as new FDI, the pattern has changed, particularly in 2021. 

Another insight regards the permanent impact of the FDI investors, mediated by the outflows of incomes generated - some EUR 3.7 bln over the 12-month rolling period ending Jul-21. The figure has been constant or slightly higher (EUR 4 bln per year) over the period since 2015.

(Photo: Wanida Prapan/ Dreamstime)

andrei@romania-insider.com

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