Daniel Anghel, Country Managing Partner, PwC Romania
They say no one is a prophet in their own country. For years, investors, business organizations, and economists have warned that Romania is gradually losing its appeal: rules changed overnight, less efficient institutions, rising costs, and infrastructure that keeps falling behind. The signals were heard, but rarely truly listened to.
Right after the National Bank of Romania (BNR) published its latest data last week, Ziarul Financiar asked in an opinion article why foreign direct investment had collapsed—and who could explain it. The question was, of course, rhetorical. Still, I choose to read it as an invitation to respond that something must be done—something investors and economists have been saying for far too long: we need, at the very least, stability and predictability. But we also need a new model of economic growth. What do we put in place of the low-cost advantage that fuelled growth over the past 20 years?
When foreign direct investment drops several times over compared to similar periods in previous years—falling to just 669 million euros—this is no longer a simple statistical fluctuation. It's a warning sign. The roughly 3-billion-euro decline was driven in roughly equal measure by a drop in reinvested profits, intra-group loans, and equity participations.
Although part of the decline can be attributed to dividend distributions and cyclical factors, FDI levels in the first half of 2026 remain well below those recorded in the same periods in previous years: 4.5 billion euros in 2022, 2.8 billion in 2023, 2.4 billion in 2024, and 3.72 billion in 2025. In other words, seasonal effects alone no longer explain the gap—the data point to a genuine decline in profitability, confidence, and investor appetite.
The causes behind this trend are both domestic and external. Political, legislative, and fiscal instability, combined with deteriorating macroeconomic indicators and eroding competitiveness, have weakened Romania's appeal—at a time when the global economy itself is undergoing profound change.
Romania Has Become an Increasingly Expensive Market for Foreign Investors
For the past 20 years, Romania's investment case rested on its geographic position, market size, a skilled yet affordable workforce, generally lower production costs, and a relatively attractive tax regime. NATO and EU membership added further confidence in institutional and legislative stability. Today, most of these advantages have eroded, and only the prospect of OECD accession still stands out as a positive sign.
Although still below the EU average, Romania's average wage has grown by 127% over the past decade. During the same period, the country posted one of the highest increases in labour productivity in the EU, at 34%—but that gain only partially offset rising wages. As a result, Romania's nominal unit labour cost—a measure of the relationship between wages and productivity—rose by 137% between 2015 and 2025, by far the steepest increase in the EU. By comparison, the same indicator rose by 108% in Bulgaria, 105% in Hungary, 66% in Poland, and 63% in the Czech Republic.
Energy Costs: A Vulnerability at the Core of Romania's Economy
Energy costs have become a growing burden on company expenses, increasingly shaping capital flows and investment decisions.
The war in Ukraine, the conflict in the Middle East, and their combined impact on global energy markets have exposed deep vulnerabilities in Romania's energy sector. Despite the country's substantial natural resources, Romania continues to face major imbalances in its energy markets—imbalances that translate directly into higher prices.
Romania is now one of the most expensive markets in the EU for non-household electricity consumers, based on average pre-tax prices. Over the past ten years, electricity costs for this segment have risen by more than 150% in Romania, compared with an EU-wide average increase of around 80%.
At a time when European industry as a whole has already become less competitive globally due to high energy costs, Romania is experiencing an even sharper decline.
As a result, the country is no longer an attractive destination for industries that depend almost entirely on low costs—such as textiles or low-value-added auto component manufacturing. Romania needs to shift toward industries with greater complexity and added value.
Lack of Predictability: The Real Obstacle
Beyond these long-term structural trends, the lack of predictability is currently the single biggest obstacle to attracting foreign investment in Romania.
Fiscal consolidation—driven mainly by new tax hikes that have further slowed the economy—has only added to the uncertainty. Investors now see the absence of a stable government as the single greatest risk.
The latest surveys from the Foreign Investors Council confirm this: legislative uncertainty, taxation, and political instability, alongside inflation and interest rates, top the list of concerns for foreign business leaders in Romania.
Romania needs to rethink its pitch to investors. It's no longer enough to say we're the second-largest market in Central and Eastern Europe, or that we offer low production costs.
The real challenge is building a stable climate—and an equally compelling story to go with it, one grounded in skills, productivity, and the ability to generate real added value. Romania needs an investment strategy, and there's no shortage of successful models from other countries to draw on.
Without such a shift, the decline in foreign direct investment risks becoming more than a passing episode—it could signal a structural loss of competitiveness.
