Romania: Can it become the leader of Southeastern Europe?
* the article was first published on the 5th of March 2012
Europe is changing faster than we realize. Just 6 years ago, SEE (South-East Europe) had a completely different status. Greece was the leading country, being the only member of E.U. and having a high GDP growth. Romania and Bulgaria were about to join, while Croatia’s entrance had been postponed and Serbia was still facing several problems. Turkey was exiting a major economic crisis and Hungary was looking “attractive”.
Today the situation is totally different:
· Greece has a long “walk in the dessert” ahead of it before it can reach its previous status.
· Croatia is preparing to join the E.U., Serbia will follow. But their size does not allow them to become regional leaders.
· Hungary has become Europe’s new problem. Due to the country’s recent problems, its momentum seems lost for the time being.
· Turkey might slow down from the impressive economic boom it experienced over the last 5 years.
· Bulgaria and other Southeastern European countries cannot really differentiate.
“Romania has internal problems as well” one might comment. This seems like the truth, but I strongly doubt that it is actually the real status of the Romanian society. The country with the biggest population in Southeastern Europe entered 2012 having a completely different status compared to its near past:
· Romanian macroeconomics are healthier than ever. The GDP grew in 2011, the deficit is set to become 0 in 2013, consumption increased and exports continued to boost. These are just some of the factors that define an economy which seems to be recovering from the crisis.
· The Romanian Central Bank is probably the most powerful in the area, with reserves exceeding 33 billion Euro. Its Governor is the local symbol of stability. He took difficult decisions which have protected the country’s future.
· Even IMF acknowledged that part of the necessary structural reforms took place already.
· Several Romanian cities are being transformed into local hubs, with international importance. Craiova is the city of Ford, Pitesti hosts the successful Dacia, Cluj and Timisoara attract investments of million Euro in the IT and other segments, Brasov and Constanta combine tourism, renewable energy and agriculture, while Iasi continues attracting investors who target the Northern Romanian region and the Republic of Moldova.
· European grants are still here for Romania. Despite the absorption problems so far, a speeding procedure has been created in order for 10 – 15 billion Euro to enter the real economy in the following 3 years.
The above does not mean that Romania is a paradise. There is still a lot to be done during the critical years 2012 and 2013. Should Europe exit the crisis, the Romanian economy is expected to rise immediately. This is due to the fact that it is attached to Western European countries and, in a positive scenario, its GDP may even double during the following decade.
It is not by coincidence that the pipeline of new Retail Real Estate projects in Romania is almost 2 billion Euro. Also a second “generation” of residential developments is on its way, while the office market will soon be interesting again.
Romania has serious chances of becoming the new SEE leader. This is why it can become an option for a long term investor again.
(This article was contributed to the MIPIM blog, affiliated to the no.1 Real Estate exhibition in the world)