Romania: One of Europe's fastest growing economies!
11 September, 2017
Eastern European countries have always been associated in the Western mindset as gloomy, post-soviet places, lacking innovation and business acumen. But Romania, a country of just 20 million, is proving that with the right reforms and attractive tax rates, you can become one of the top growing countries in the EU.
Surprising to many, Romania beat GDP growth expectations in 2015 with almost half percent! From estimated 3.9% real GDP growth, the country's statistical institute, backed by Eurostat confirmed that the total GDP growth was closer to 4.3%. Such high result pushed Romania to become the fastest in the EU in terms of GDP growth, along with another top performer Ireland.
The country is expected to grow even faster in 2017, as high as 5.8 percent.
Why this economic growth?
Some accuses three main reasons for this sudden business surge, namely: i) tax cuts, accompanied by Government reforms; ii) tougher stance against corruption and organized crime and iii) faster absorption of EU funds.
Tax reforms in Romania
While there is a general trend in Eastern European countries to lower corporate taxation, Romania seems to have found the recipe for success. The government slashed its high value added tax from 24% to more reasonable 20%, reduced significantly withholding taxation and removed the controversial 'special construction tax".
Economic growth and corruption are closely interconnected. A corrupt country cannot operate efficiently and distorts competition on many levels, but Romania implemented and continues to improve new strong reforms, backed by EU support, in order to fight corrupt politics. We believe their efforts contributed to the productivity of private and public businesses;
Lowered corruption levels also support faster absorption of EU program funds for infrastructure and business support. With increased percentages of EU funds utilized, Romania aims to bring further investment to fuel its economy.
Due to growing globalization, the world is becoming a rapidly competitive place for all economies. Only through quality reforms, tax optimized programs and minimization of corruption practices can one county manage to replicate Romania's success story.
Interested in further readings on Romania? Here is some insight on doing business and setting up a company.
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