User:Ronline/Romania Economy

With a GDP per capita (PPP) of $9,446 in 2006 Romania is an upper-middle-income economy that is among the most developed in Southeastern Europe and will become part of the European Union in 2007. After the Communist regime was overthrown in late 1989, the country experienced a decade of economic instability and decline, led in part by an obsolete industrial base and a lack of structural reform. From 2000 onwards, however, the Romanian economy was transformed into one of relative macroeconomic stability, characterised by high growth and low unemployment. In 2004, GDP growth was 8.4%, one of the highest in Europe, even though this rate was halved in 2005, to 4.1%, mainly due to floods in significant agricultural areas. In 2006, growth is expected to exceed 7%. Unemployment in Romania is at 5.1% in July 2006 which is very low compared to other middle-sized or large European countries such as Poland, France and Germany. Foreign debt is also comparatively low, at 20.3% of GDP. However, high growth and global inflationary pressures have led to Romania having a relatively high inflation rate, recorded at 8.1% in 2005 and expected to fall below 5% by the end of 2007.

Another challenge for the Romanian economy is a persistently-high current account deficit, valued at 8.7% of GDP in 2005. Despite this, exports have increased substantially in the past few years, with a 24.8% year-on-year rise in exports in the first quarter of 2006. Romania's main exports are clothing and textiles, industrial machinery, electrical and electronic equipment, metallurgic products, raw materials, cars, military equipment, software, pharmaceuticals, fine chemicals, and agricultural products (fruits, vegetables, and flowers). Trade is mostly centred on the member states of the European Union, with Germany and Italy being the country's single largest trading partners.

After a series of privatisations and reforms in the late 1990s and early 2000s, government intervention in the Romanian economy is somewhat lower than in other European economies. In 2005, the liberal-democrat Tăriceanu government replaced Romania's progressive tax system with a flat tax of 16% for both personal income and corporate profit, resulting in the country having one of the lowest fiscal burdens in Europe, a factor which has contributed to the growth of the private sector. The economy is predominantly based on services, which account for 54.9% of GDP, even though industry and agriculture also have significant contributions, making up 35.0% and 10.1% of GDP, respectively. Additionally, 31.6% of the Romanian population is employed in agriculture and primary production, one of the highest rates in Europe.

Since 2000, Romania has attracted increasing amounts of foreign investment, becoming the single largest investment destination in Southeastern European. Foreign direct investment was valued at €5.2 billion in 2005, an increase of 26.8% over 2004. According to a 2006 World Bank report, Romania is currently ranked 49th out of 175 economies in the ease of doing business, scoring higher than other countries in the region such as Hungary, Poland and the Czech Republic. Additionally, the same study judged it to be the world's second-fastest economic reformer in 2006. The average gross wage per month in Romania is 1122 lei as of July 2006, equating to €318.33 based on international exchange rates and €930 based on purchasing power parity.