Still strong investment needs in Romania - Joint NBR–EIB Conference, Results of EIB Group Survey on Investment
Survey Presented on Romania: Investment over the last three years was the right amount, only twelve per cent of firms are finance constrained. However, the investment outlook in Romania is mixed. Political and regulatory climate is the main short-term barrier to implementing investment and productivity levels are well below the EU average
Today the National Bank of Romania and the European Investment Bank held a joint conference on Investment and Investment Finance in Romania. Understanding investment constraints is crucial for Romania to continue its path towards economic convergence. The EIB’s Investment survey on Romania provides a unique view to better understand investment trends and firms’ views on investment across the EU. The conference featured the first presentation of results in Romania as well as discussion about its implications and ways to better support investment in Romania.
The EIB Group survey on Investment and Investment Finance - the case of Romania was published in the framework of a BNR-EIB Conference. The survey provides a number of unique insights into Romanian firms’ investment activity, plans and their views on what holds back investment. According to the EIB Group survey, nearly three quarters of firms report that they have invested the right amount over the last three years. At the same time the share of firms that think they have invested too little is higher in Romania than among EU peers. EIBIS also reveals that firms with too little investment rank their capital stock to be of lower quality – implicitly signalling investment backlog. Overall, Romanian companies find their capital stock of lower quality compared to EU-peers, too.
Firms in Romania mostly invest in tangibles and relatively few resources go into Research and Development and employee training. The investment outlook in Romania is mixed and the productivity levels of Romanian firms remain well below EU average.
About twelve percent of firms face finance constraints and reliance on internal financing sources remains high. While access to finance is not an issue in general, there are some firms that face greater difficulties to successfully tap external financing than others. High reliance on internal sources typically poses bigger obstacles for small and innovative firms. While general uncertainty tops the list of impediments to future investment in the EU and Romania, the share of Romanian companies considering the country’s transport infrastructure as an impediment stands out – about 60% see it as an obstacle compared to 38% in the EU. Also business regulation and the limited availability of skilled staff pose impediments.
Andrew McDowell, Vice-President of the European Investment Bank, commented: “The survey, which takes place right across Europe including here in Romania, provides the EU Bank with a powerful policy tool for recognising and attending to firms' investment plans, needs and constraints. With a large staff here on the ground and full support from Luxembourg, the EIB stands ready to finance additional investments by Romanian businesses”.
Mugur Isărescu, Governor of the National Bank of Romania: “When credit finances efficient investment, it contributes to an increase in potential output. In particular for small and medium-sized enterprises, the prudent acceleration of the credit engine would be a great opportunity for sustainable development.”
This country overview presents selected findings based on telephone interviews with 476 firms in Romania in July-October 2016. The survey is part of the annual EIB Group Survey on Investment and Investment Finance (EIBIS) is an EU-wide survey of 12 500 firms that gathers quantitative information on investment activities by both SMEs and larger corporates, their financing requirements and the difficulties they face.
The European Investment Bank is the long-term lending institution of the European Union owned by the EU Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.