Unfortunately, nothing is real and should be taken very cautiously.
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Originally Posted by chrisnolen
1. The economy becomes stronger and stronger
The statistics is showing that Romania has the most fast growing economy in the EU after Estonia, Latvia and Lithuania.
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That's simply false. Romanians have big troubles now. Leu has dropped 20% since July 2007, inflation is among the biggest in Europe and today some guys from the European BAnk stated that Romania will enter the Eurozone (making Euro as official currency) in 2015 (instead of 2012, as everybody hoped).
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Originally Posted by chrisnolen
2. Fast growing GDP
GDP (purchasing power parity) has reached US$$197.3 .
It is growing and growing in more then 20% per annum. This rate is definitely setting Romania as one of the largest economies in Eastern Europe.
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Yes, the GDP is growing, but the rythm is somewhere around 5% / year, and the trend is down, not up. And one more thing, only a couple of years ago Romania managed to reach the GDP from 1989. This says everything.
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Originally Posted by chrisnolen
3. More foreigners are coming to invest!
Foreign direct investment (FDI) which started to gain popularity at 2001, has been growing extremely fast by reaching over €5,000 million in 2005, and more the €8,000 million in 2006.
Major Companies from all over the world have been coming to invest in Romania in the last few years and among them also private investors who feel it’s the right time to invest.
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Not so fast!... the so called invesments were, in 2006, mainly from the privatisations of BCR Bank (with Erste Bank Austria) and Petrom (romanian state owned oil company). In 2007 only 2 big investments were announced, Ford at Craiova - but this is still uncertain - and ***** at Cluj. On the contrary, the investors are starting to migrate elsewhere because the Romanians are mass-migrating towards Italy and Spain, and due to the lack of workers salaries are becoming much expansive than in China (textiles) or India (IT&C).
Today, the gross of FDI is in construction and residential market. This is a market which depends essentialy of the state of economy which is in deep crisis now.
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Originally Posted by chrisnolen
4. Falling Inflation
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You should read the news. Romania has the 2nd inflation rate in EU after Latvia. In 2007 was expected to fall to 3.8%, but finaly it was... 6.7%, which is quite huge (almost 2 times the target).
Quote:
Originally Posted by chrisnolen
5. Increasing Employment
Unemployment fell to 6.2% in May 2006 (less than 3% in Bucharest) which is lower than many more developed European economies. The rate is keep getting lower and lower.
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You know why? Because a. 3 million are working abroad (1 million in Spain, 1 million in Italy, 1 million in Canada, UK, France, Germany, Greece and Israel mainly) and b. because some 3 million paysans are cuantified as... "rural workers" (in fact they are living under the poverty line). The government did everything, after 2000, to erase these poor people from the official statistics because their acceptance was against the criterias of EU.
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Originally Posted by chrisnolen
6. EU Funding
Romania gained the most substantial funds in terms of EU funding per capita between 2004 and 2006. For the years 2007-2013, Romania will receive an additional €30 billion, the highest allocation of all the new EU member states.
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Let me quote some numbers, they are more relevant than any blah blah. In 2007, 1st year as EU member, Romania...
- submitted to EU 1 billion Euro
- took from EU only 400 millions out of its deserved 3 billions shared.
You know why? Because the bureaucracy was unable to "absorb" the funds.
As for example out of 200 km of motorways, planified in 2007,
Romania constructed 0. Zero. Null. Nada. Rien. Niente.
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Originally Posted by chrisnolen
7. The tourists are coming!
The tourism industry in Romania is becoming more and more important. In 2006 – the incomes was more then $8 billion from tourism only with a 7.4% annual growth forecasted over the next ten years (Source: World Travel and Tourism Council).
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Really?!
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Originally Posted by chrisnolen
8. Estimation for total increasing (based on the salaries increasing 14% per year)
We already witnessed a dramatic growth in the employee’s minimum salary rules in Romania.
The salaries increasing are not over yet…the estimation is a continuing growth in the salaries of 14% per year.
For now the Romania average salary is almost 15% from the average EU salary.
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... and now, after 1Euro=3.75 Lei, even less.
In July 2007 the average salary was 1000 Lei. At a rate of 1Euro=3,11Lei this was 322 Euros. Today the average salary is 1100 Lei. At a rate of 1Euro=3,75 Lei, this is 293 Euro.
A netto decrease worth of 10%.
Quote:
Originally Posted by chrisnolen
9. Romania has the lowest tax rates in the European Union.
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This 16% will not last. The government has already acknowledged tjat in 2009 they will be unable to provide pensions and state salaries, so everyone expects aditional taxes.
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Originally Posted by chrisnolen
10. The best prices per SQM in the area!
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This is a joke, isn't it?
Even Dinu Patriciu, the Romanian oil mogul has recently (23Jan. 2008) stated that prices in real estate will fall...
"and this fall will hurt". Coface has released an explicit report that states that prices in old communist era build flats will drop by 50% by 2010. The real estate agencies are among the most cited businesses when speaking of bankruptcy in 2007 (together with construction companies and small retailers).
IMHO the only reason to invest
today in real estate in Romania, apart from any personal reasons (need to work in Romania, marrying somebody there etc.), is the intense desire of losing some big bucks. And when I'm saying "losing", I do not mean losing 5% or 10%, but 40-50%.