Creative Industries Romania
Population: 21,529,967 (July 2017 est.)
Internet country code: .ro
three equal vertical bands of blue (hoist side), yellow, and red; modeled after the flag of France, the colors are those of the principalities of Walachia (red and yellow) and Moldavia (red and blue), which united in 1862 to form Romania; the national coat of arms that used to be centered in the yellow band has been removed now similar to the flag of Chad, whose blue band is darker; also resembles the flags of Andorra and Moldova
note: now similar to the flag of Chad, whose blue band is darker; also resembles the flags of Andorra and Moldova
The principalities of Wallachia and Moldavia – for centuries under the suzerainty of the Turkish Ottoman Empire – secured their autonomy in 1856; they were de facto linked in 1859 and formally united in 1862 under the new name of Romania. The country gained recognition of its independence in 1878. It joined the Allied Powers in World War I and acquired new territories – most notably Transylvania – following the conflict. In 1940, Romania allied with the Axis powers and participated in the 1941 German invasion of the USSR. Three years later, overrun by the Soviets, Romania signed an armistice. The post-war Soviet occupation led to the formation of a communist “people’s republic” in 1947 and the abdication of the king. The decades-long rule of dictator Nicolae CEAUSESCU, who took power in 1965, and his Securitate police state became increasingly oppressive and draconian through the 1980s. CEAUSESCU was overthrown and executed in late 1989. Former communists dominated the government until 1996 when they were swept from power. Romania joined NATO in 2004 and the EU in 2007.
Romania, which joined the EU on 1 January 2007, began the transition from communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country’s needs. Romania’s macroeconomic gains have only recently started to spur creation of a middle class and to address Romania’s widespread poverty. Corruption and red tape continue to permeate the business environment.
In the aftermath of the global financial crisis, Romania signed a $26 billion emergency assistance package from the IMF, the EU, and other international lenders, but GDP contracted until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary standby agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability; no funds were drawn. In September 2013, Romanian authorities and the IMF/EU agreed to a follow-on standby agreement, worth $5.4 billion, to continue with reforms. This agreement expired in September 2015, and no funds were drawn. Progress on structural reforms has been uneven, and the economy still is vulnerable to external shocks.
Economic growth rebounded in the 2013-17 period, driven by strong industrial exports, excellent agricultural harvests, and, more recently, expansionary fiscal policies in 2016-2017 that nearly quadrupled Bucharest’s annual fiscal deficit, from +0.8% of GDP in 2015 to -3% of GDP in 2016 and an estimated -3.4% in 2017. Industry outperformed other sectors of the economy in 2017. Exports remained an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was the major driver, due to tax cuts and large wage increases that began last year and are set to continue in 2018.
An aging population, emigration of skilled labor, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package compromise Romania’s long-term growth and economic stability and are the economy’s top vulnerabilities.