Despite progress since joining the EU in 2007, Romania still faces challenges such as government influence in the economy, state-owned enterprises, and issues with the judicial system, corruption, bureaucracy, and political instability. Poor infrastructure continues to impact business costs, productivity, and the country’s ability to attract foreign investment. Romania’s connections to the EU’s transportation infrastructure are underdeveloped, limiting its potential for new investment, trade, and tourism.
Romania is not a member of the Euro Zone, so payments are made in the New Romanian Leu (RON). However, many companies and consumers have debt denominated in euros, leading to trade inefficiencies due to higher transaction costs and exchange rate fluctuations. At times, U.S. firms also face challenges in recruiting and retaining employees due to a labor shortage, particularly in the northern and western parts of the country.
Frequent legislative changes without prior private sector consultations and the lack of Regulatory Impact Assessments (RIAs) pose additional challenges. The conflict in Ukraine has increased market uncertainty, especially for companies involved in international trade. The currency market has seen high volatility, similar to levels during the pandemic.
According to the World Bank Group, it takes 20 days to start a business in Romania, compared to the Southeast Europe average of 9 days. Long-term government objectives for Romania include improving infrastructure, overhauling the public health system, enhancing the state education system, and developing a greener economy. Despite these challenges, nearly half of investors believe Romania’s business environment will continue to improve in the short-term.