ING Report: Romania's nominal GDP could exceed €700bn in 2034

The nominal GDP of Romania could exceed 700 billion euro in 2034 and it could get closer to 800  billion euro in 2035, with a growth rhythm of approximately 3% annually and similar medium inflation, according to the macro-economists of ING Bank.These estimates would position Romania in competition with countries such as Austria and Sweden for the top 10 economies in the EU, says the press release of the bank.At the same time, the living standard of the Romanians will improve significantly, being reflected by the growth of GDP/ capita, expressed in purchasing power parity (how much a country’s citizens can buy with their income compared to citizens of other countries). Thus, from around 55% of the EU average in 2013, Romania has already climbed to almost 80% today.'By 2035, we expect a robust, mature and diversified economy with a better balance between domestic demand and local supply. Sectors such as IT, construction and automotive can become the backbone of the economy, alongside currently still emerging industries such as renewable energy. The modernisation of physical and digital infrastructure, fuelled by European funds, will reduce regional development gaps. Overall, by 2035, we have a real chance of reaching unprecedented levels of prosperity,' said Valentin T?taru, chief economist of ING Bank Romania, quoted in the press release.   According to the quoted source, investments, especially those financed from EU funds and those drawn through foreign direct investments, will mean a main factor in the growth of GDP for the next decade.Efficient absorption of European money (approximately 28 billion euro from PNRR until 2026 and another 50 billion allocated through EU budget 2021 – 2027) may stimulate modernization of infrastructure and human capital, generating ‘ a major boom’ for the economy.Also, the trend towards nearshoring (relocating production closer to Western markets) may make Romania a preferred destination for new investment, as long as labour remains available and competitive. 'Romania has great chances to become an increasingly attractive destination for foreign investors over the next ten years, provided stability is maintained and reforms are implemented. A first determining factor will be macroeconomic stability - i.e. controlled budget deficit, low inflation and a relatively predictable leu. Investors value predictability, and achieving the fiscal targets (deficit below 3% of GDP) and consolidating public finances will increase confidence. Infrastructure improvements will also increase attractiveness. As motorways, modernised railways and ports are developed (including with the help of EU funds), logistics costs come down and Romania becomes more convenient as a production and distribution hub. Romania could become one of the favourite destinations for western companies relocating their production closer to home. This nearshoring is already visible in new investments in production (for example, some producers of car parts or electronic equipment chose Romania as regional base). With clear strategy for the promotion of investments, Romania may put to value the statute of sixth country as population of the EU in order to draw foreign capital flows for the years 2025 – 2025’ said Valentin Tataru.The IT&C sector, which has demonstrated its resilience and growth potential, will grow at an accelerated pace, according to ING macroeconomists.   Romania has real potential to become a regional IT&C hub and an innovation leader. Integration into global IT chains is already strong - major corporations have development centres here and the local tech startup ecosystem is expanding. Romania's economy will be significantly improved by the integration of AI and blockchain, and the country can be transformed into a tech creator.   Another industry with growth potential is that of renewable energy and green technologies. EU commitments regarding climatic changes as well as the natural resources of Romania (high wind potential in Dobrogea, good conditions for solar power, etc.) will boost investment in wind, solar and green sources parks. It is estimated that by 2034 almost half of the end consumption of the country’s energy could be covered from renewable sources, which means quick development of this sector.At the same time, high-tech manufacturing industries will grow: e.g. electronics and automotive (including production of electric vehicles and batteries). Thus, industries anchored in innovation, technology and sustainability will be the 'stars' of economic growth until 2035, gradually shifting the structure of the economy towards a more technologically advanced one.   As regards Romanian agriculture, the future of this sector by 2035 will depend on the capacity to adapt to climatic changes and the level of take-up of new digital technologies. EU programmes and funds for rural digitization will support this process. In the optimistic scenario, in 2035 we will see a more climate resilient Romanian agriculture, with medium and large farms well technologized and connected to digital markets.The report notes that wages in Romania tend to rise faster than inflation. Specifically, from January 2007 (when Romania joined the European Union) until the beginning of this year, the average net wage has risen by about 480%, while prices have increased by 125%. This process of wage convergence with the EU is likely to continue until 2035 as the economy grows.   In terms of investments, real estate is likely to remain at the top of Romanians' top choices, according to ING macroeconomists, as property is perceived as a safe and tangible haven. Romania already has the highest rate of home ownership in the EU (~95% of Romanians live in their own home), and investments in apartments or land will continue to be attractive, especially amid urbanisation and economic growth. Even so, we will see an increased appetite for financial investments. More and more Romanians are discovering the stock exchange: the main BET index has had a total return (including dividends) of almost 400% over the past decade, demonstrating the potential for capital market gains. ING Bank Romania is part of ING Group, a global international financial institution offering banking services to more than 38 million individual, corporate and institutional customers in over 40 countries. Founded in 1994, ING Bank Romania is today a universal bank, offering products and services to all categories of customers - large and small companies, financial institutions, small entrepreneurs and individuals.