Net foreign direct investments (FDI) in Romania contracted by 7% year on year (chart) to less than €6bn in the 12 months to November 2024, according to data published by the National Bank of Romania (BNR). During this period, the FDI-to-GDP ratio fell to 1.7%, down from 2.2% in the previous 12 months.

FDI covered only a small fraction of the current account deficit, which widened to 7.9% of GDP during the same timeframe. Meanwhile, gross external debt rose by €19.2bn, equivalent to 5.3% of Romania’s 2024 GDP.

Of the €19.2bn increase in Romania’s external debt, €14.7bn was attributable to the state (public external debt). An additional €1.9bn resulted from increased intra-group debt owed by FDI companies in Romania to their parent groups.

Genuine net FDI in Romania plummeted to just €714mn (0.2% of GDP) in the 12 months to November 2024. This was one of the lowest levels recorded in recent years, comparable only to periods during the COVID-19 pandemic and after the outbreak of war in Ukraine. 

Reinvested earnings constituted the bulk of FDI during this period, amounting to €4.5bn (down 13.2% year-on-year) out of the €11.7bn profits generated by FDI companies. The remaining profits were repatriated.

Looking ahead, Romania’s bleak economic outlook and the gradual phasing out of fiscal incentives are expected to negatively impact both new equity investments and reinvested earnings in the coming year.