Economy of Romania

Economy Of Romania

Romania has a developing, upper-middle income market economy, the 11th largest in the European Union by total nominal GDP and the 8th largest based on purchasing power parity. Romania entered the 1990s a relatively poor country by European standards, largely a result of the failed economic policies of Nicolae Ceauşescu in the 1970s and of the failures of privatization in Romania during the 1990s, which decreased the GDP by almost 50% and ruined the industry because of corruption.

The collapse of the Communist regime in 1989, reforms in the 2000s (decade) and its recent entry to the European Union have led to an improved economic outlook. Romania has experienced growth in foreign investment with a cumulative FDI totaling more than $100 billion since 1989, and has been referred to as a "Tiger" due to its high growth rates and rapid development.

Until 2009, Romanian economic growth was among the fastest in Europe (officially 8.4% in 2008 and more than three times the EU average). The country is a regional leader in multiple fields, such as IT and motor vehicle production, and is expected to join the Eurozone by 2014. Bucharest, the capital city, is one of the largest financial and industrial centres in Eastern Europe.

Romania was heavily affected by the global financial downturn and gross domestic product contracted by 7.2% in 2009, forcing the government to enact harsh austerity measures and borrow heavily from the IMF. The country's economic contraction continued in 2010 at a rate of 1.2%, while the budget deficit stood at 6.6%, below the IMF-agreed target of 6.8%. Forecasts predict a recovery of 1.5-2.8% in 2011.