Only 71 out of 100 Romanian companies made investments in 2019 (compared to 85% in the European Union on average) and most of the projects targeted increasing the production capacities not innovation, according to study by the European Investment Bank (EIB), local Agerpres reported.
Following the contraction in 2018, the investments activity in Romania increased in 2019, and corporate expectations improved. However, the macroeconomic environment in the coming years will become more difficult, given the slowdown in economic growth and the worsening fiscal balance.
However, even with limited fiscal space, prioritizing public investments over current spending and better fiscal predictability would stimulate private investment needed to transition to a green, circular and smart economy, the EIB report reads.
"Compared to other countries, it is clear that Romania has a low economic performance mainly due to the lack of investments. Public investments in Romania have been cut in the last two years to allow higher social spending. The lack of infrastructure is a major obstacle for investments in Romania. We spend a little less than 3% of the GDP on investments in the public sector and we certainly need bigger investments in infrastructure,” Ionut Dumitru, chief economist of Raiffeisen Bank Romania, said at a business conference organized by the EIB, according to Agerpres.
He believes that Romania's major investment issue is insecurity and lack of predictability, especially in the election years.
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