Economy of Romania

Romania has a developing, upper-middle income market economy, the 11th largest in the European Union by total nominal GDP and the 8th largest based on purchasing power parity. Romania entered the 1990s a relatively poor country by European standards, largely a result of the failed economic policies of Nicolae Ceauşescu in the 1970s and of the failures of privatization in Romania during the 90s, which decreased the GDP by almost 50% and ruined the industry because of corruption. However the collapse of the Communist regime in 1989, reforms in the 2000s and its recent entry to the European Union have led to an improved economic outlook. Romania has experienced growth in foreign investment with a cumulative FDI totaling more than $100 billion since 1989, and has been referred to as a "Tiger" due to its high growth rates and rapid development. Until 2009, Romanian economic growth was among the fastest in Europe (officially 8.4% in 2008 and more than three times the EU average).The country is a regional leader in multiple fields, such as IT and motor vehicle production, and is expected to join the Eurozone by 2014.Bucharest, the capital city, is one of the largest financial and industrial centres in Eastern Europe.
Romania was heavily affected by the global financial downturn and gross domestic product contracted by 7.2% in 2009, forcing the government to enact harsh austerity measures and borrow heavily from the IMF. The country's economic contraction continued in 2010 at a rate of 1.2%, while the budget deficit stood at 6.6%, below the IMF-agreed target of 6.8%.Forecasts predict a recovery of 1.5-2.8% in 2011.

EU membership

On 1 January 2007 Romania entered the EU. This led to some immediate international trade liberalization, but there was no shock to the economyThe government is running annual surpluses of above 2%.

This is to be contrasted with enormous current account deficits. Low interest rates guarantee availability of funds for investment and consumption. For example, a boom in the real estate market started around 2000 and has not subsided yet. At the same time annual inflation in the economy is variable and during recent years (2003–2008) has seen a low of 2.3% and high of 7.8%.

Most importantly, this poses a threat to the country's accession to the Eurozone. The Romanian government plans for the euro to replace the leu in 2012. However, experts predict that this might happen as late as in 2014. From a political point of view, there is a trade-off between Romania's economic growth and the stability required for early accession to the monetary union Romania's per-capita PPP GDP is still only about a 40% of the EU average, while the country's nominal GDP per capita is about 25% of the EU average.

In the winter of 2004 the government introduced a flat tax of 16% that was introduced on January 1, 2005. This is done in hope for higher GDP growth and greater tax collection rates. The reform, which some called a "revolution" in taxation, was met with mild discussions and some protests by affected working classes. Romania subsequently enjoyed the lowest fiscal burden in the European Union, until Bulgaria also switched to a flat tax of 10% in 2007.

The accession of Romania to the European Union has given the Union access to the Black Sea.

Member State sorted by GDP	GDP in billions of US $ (2010)	GDP % of EU (2010)	Annual change  % of GDP (2010)	GDP per capita in PPP US $ (2008)	Public Debt % of GDP (2010)	Deficit % of GDP (2010)	Inflation % Annual (2010)	Unemp. % (2010)
European Union	14,940	100.0%	0.9	33,700	63.8	-2.6	3.5	7.2
Romania	432	2.0%	1.5	14,400	21.2	-4.0	5	4.4