ROMANIA

Covid-19 discloses weak economic fundamentals

B3

SENSITIVE RISK for enterprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

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GDP USD240bn (World ranking 47, World Bank 2018)
Population 19.5mn (World ranking 59, World Bank 2018)
Form of state Republic
Head of government Ludovic ORBAN (Prime Minister)
Next elections 2020, legislative
  • EU membership and fairly good international relations
  • Competitive industrial sector
  • Adequate business environment
  • Government instability
  • Arrears of state-owned enterprises
  • Banking sector vulnerabilities
  • High private-sector debt (notably in foreign currency)
  • Rapidly rising current account deficit, while net FDI inflows are declining
  • High external debt burden

Trade structure by destination/origin

(% of total)

Exports Rank Imports
Germany 19%
1
19% Germany
Italy 8%
2
10% Italy
France 6%
3
8% Hungary
Hungary 6%
4
5% China
Turkey 4%
5
5% France

Trade structure by product

(% of total)

Exports Rank Imports
Electrical Apparatus 13%
1
7% Electrical Apparatus
Vehicles Components 8%
2
5% Miscellaneous Hardware
Cars and Cycles 6%
3
5% Engines
Engines 5%
4
5% Plastic Articles
Miscellaneous Hardware 4%
5
4% Vehicles Components
Although Romania’s regulations on late payments are more demanding than EU rules on the matter, the paying behavior of domestic companies remains problematic.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Legal proceedings are long and costly, therefore use of arbitration or a foreign European forum is worth considering since both arbitral awards and decisions rendered in EU countries are fairly enforceable.

Before commencing legal actions of any kind, however, it is essential to conduct thorough pre-legal action. Indeed, as time goes on, chances are that bad payers will become insolvent. In such cases, recovering the debt becomes practically impossible.

Euler Hermes

Economic Research Team

research@eulerhermes.com

Manfred Stamer

Country Risk Analyst

manfred.stamer@eulerhermes.com

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