Reason No. 1 – A Booming Economy and Tourism to lead to boom in the holiday apartments in Romania

According to the National Statistics Office the economy grew an encouraging 8.2% in 2004, 5.3% in 2005, and growth of approximately 7% is forecast for 2006 and 2007. In fact, the Q2 2006 GDP growth rate was up 7.8% compared to Q2 2005, which makes Romania the fourth fastest growing economy in the EU after Estonia, Latvia and Lithuania.

Reason No. 2 - Falling Inflation

2005 also saw inflation fall to a record low of 7.5% from dizzying heights of 22% in 2002, and it is expected to fall to 3.8% by 2006. With inflation under control, this will inevitably lead to more confidence in the property buying market.

Reason No. 3 - Growing GDP

GDP (purchasing power parity) reached US$183.6 billion in 2005 and it’s projected to exceed the US$200 billion mark in 2006, that’s a 17% growth rate per annum since 1999. At this rate, Romania is set to become one of the largest economies in Eastern Europe.

Reason No. 4 – Increasing Employment

Unemployment fell to 6.2% in May 2006 (less than 3% in Bucharest) which is lower than many more developed European economies. This is rate is still falling rapidly.

Reason No. 5 - Increasing Foreign Investment

Foreign direct investment (FDI) has accelerated fast since 2001, reaching over €5,000 million in 2005, and the prestigious Vienna Institute For International Affairs predicts it will exceed €8,000 million in 2006 – some of the most impressive figures in Eastern Europe.

Some of the larger foreign investors in Romania include Renault, Mittal Steel, Siemens, Colgate-Palmolive, Philip Morris, ABN Amro Bank, Bank Austria, Continental Automotive, Daewoo, McDonalds and Coca-Cola.

Key Romanian industries (and significant exports) include clothing and textiles, industrial machinery, electrical and electronic equipment, semiconductor fabrication, metallurgic products, raw materials, motor vehicles, military equipment, software, pharmaceuticals, chemicals, petrochemicals, foodstuffs, agricultural products. The service sector grew by 8.1% on average in 2005 (construction 9.9%).

Romania has a leading role in attracting FDI in Eastern Europe. In 2005, out of the total EUR 10.4 billion in FDI attracted by countries in the region, Romania received half of these inflows. The positive trend continues in 2006, where, in the first four months of the year, FDI increased 130% over the similar period of the previous year, up to EUR 2.3 billion. Comparatively, Poland reported EUR 2.7 billion as direct foreign investment over the same period, Bulgaria EUR 765 million and the Czech Republic, EUR 564 million.

Since the late 1990s, there have been several economic reforms (many instigated as part of the country’s bid to join the EU) including the liquidation of the large energy-intensive industries and major reforms in the agricultural and financial sectors. As of 2005, a significant amount of Romania’s major companies have been privatised, including the majority of banks, the largest oil companies Petrom and Rompetrol, energy distributors and telecommunications companies.