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Investors optimistic about Romania despite 2023 FDI drop – survey

Jun 24, 2024, 9:49:37 AMArticle by Bogdan Todasca
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June 24 (SeeNews) - The majority of investors foresee an increase in Romania's appeal as an investment destination over the next three years despite a 13% annual drop in foreign direct investment (FDI) in the country in 2023, according to a poll by consultancy EY.

Investors optimistic about Romania despite 2023 FDI drop – survey
Bogdan Ion, Country Managing Partner, EY Romania and COO for EY Central and Southeast Europe and Central Asia Region Source: EY

The EY Romania 2024 Attractiveness Survey highlighted that 67% of respondents expect an increase in Romania's investment appeal, EY said in a press release last week.

The EY Romania 2024 Attractiveness Survey was conducted between February and March 2024, polling a representative sample of 100 decision-makers at the executive management and board level.

About 46% of those polled said the country has remained a resilient market for investment and plan to establish or expand existing operations, according to EY.

Only 41% of respondents expected an increase in Romania’s attractiveness as an investment destination last year.

“Romania stands out by surpassing Greece and Bulgaria in the number of FDI projects and by ranking fifth in Central and Eastern Europe in terms of the average number of jobs created per project,” Bogdan Ion, Country Managing Partner at EY Romania and COO for EY Central and Southeast Europe and Central Asia Region, said.

About 52% of respondents highlight access to unexplored markets as a key factor for establishing new operations or expanding existing ones in Romania. In comparison, 37% are drawn to the country’s tax system, and 35% see the opportunity to use new technologies as a compelling reason.

The availability of non-reimbursable funding is seen as a key incentive for FDI according to 72% of respondents. The volume of Romania's state aid programmes, boosted by EU funds, is estimated at 2 billion euro ($2.14 billion) over the next three years.

Bucharest continued to dominate as the main FDI destination in 2023, absorbing 40% of projects, up by 7 percentage points (pp) compared to the previous year.

Despite a 13 pp annual decline, software and IT services continued to lead, absorbing 20% of FDI projects and remaining Romania's top sector of interest in 2023. Electronic products, along with transportation and logistics, were tied as the runner-up sectors, each hosting 10% of FDI projects.

Inflation was identified as the main risk to Romania’s attractiveness, with 14% of executives expressing concern in this regard. Public debt was identified as the main risk by 10% of respondents, while geopolitical tensions were seen as the principal threat by 9% of investors.

FDI in Romania fell 34% on the year to 6.587 billion euro in 2023, according to central bank data.

($=0.935 euro)

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