AGRICULTURE. The record farming output is put at about EUR20 billion by Raiffeisen analysts. This was the best year for the Romanian agriculture in two decades and was not made possible by weather conditions alone but also by the increased mechanization of agriculture and of compact farming land. Grain accounted for one quarter of the agricultural output, that is about EUR5 billion, up 24% on 2010.
NOKIA’S DEPARTURE. The announcement of the Finnish company that it will close the plant in Cluj not only came as a shock to the Romanian business sector but also to Europe, where only four years before Nokia had been harshly criticized for moving manufacturing operations from Bochum, Germany to Jucu, Romania. On top of this came the closing of the ING service center in Cluj, which was supposed to hire over 1,000 people, and the announced closing of the dairy plant owned by Israeli-held Tnuva from Bucharest.
FONDUL PROPRIETATEA. The listing of Fondul Proprietatea (FP.RO) in early 2011 increased the liquidity of the Bucharest stock exchange but the share price dropped so much as to be considered a disappointing flotation. The increase in the SIF (regional investment fund) stake cap by the end of the year came as a breath of fresh air for the capital market.
GAS AT 6 LEI. The price of gasoline overshooting RON6/liter mark was one of the worst news for the Romanian economy in 2011. Fuel consumption dropped 5%. The high price of strategic inputs like fuels and financing prevent a stronger rebound of the economy.
LIDL ARRIVAL. The German retailer became the largest retail chain in Romania after rebranding 107 Plus stores bought in 2010 and continued to open two stores a month. In December 2011, Lidl reached 129 stores and plans to open six more.
HIGHER GREEN POWER SUBSIDIES. The government approved an increase in subsidies for green power from one green certificate for each megawatt/hour of wind, solar or hydropower worth about EUR40 to two to six green certificates in November 2011. This means EUR2 billion in additional revenue for green power producers in 2012-2015.
OPENING OF BASARAB OVERPASS AND NATIONAL ARENA. The completion of the two investments worth EUR300 million and EUR150 million, respectively, were a breath of fresh air for the builders.
LENDING FREEZE. The announcement about a lending freeze by Austrian banks upset not only the local business sector but also the politicians. Austria’s central bank demanded local subsidiaries to stop funding the Romanian economy unless they can also attract deposits. Romanian president Traian Basescu had a harsh reaction, but the Eastern European country has yet to take any effective countermeasures.
NEW LABOR CODE. Many changes to the Labor Code, namely two thirds of its articles, came into force on May 1, 2011. The changes had been requested by the Foreign Investors Council and the new provisions allow greater freedom for employers. However, the law only helped create 70,000 new jobs since enforcement until September 2011, when 4.2 million salaried employees were registered.
EU FUND FREEZE. Checks conducted at the EU fund management authority of the Ministry of Development and Tourism forced the European Commission to halt reimbursements for the projects of this ministry. As the threat of an overall EU fund freeze was looming, the government decided to stop forwarding the bills for public procurement (80% of the total) for reimbursement and rethink the fund allocation system. Payments were resumed six months later, on December 10, after an audit conducted by the European Commission.
(English version by Loredana Fratila-Cristescu)