January 1 marked 10 years since Romania joined the European Union. Looking back, we can say it was the most important event since 1989, in terms of its macro-financial, development, political and social dimensions.

Romania’s economy began to feel the positive effects of this process as early as the preparation (pre-accession) phase, when a series of structural reforms were implemented (required to qualify for EU membership).

Delivering on the roadmap to the European Union improved Romania’s credibility and image abroad, with a positive impact on foreign investment (the volume of which increased from around EUR 2 billion in 2003 to EUR 5 billion in 2004 and 2005, over EUR 8 billion in 2006, EUR 7 billion in 2007 and EUR 9 billion in 2008).

Foreign capital inflows reinvigorated the domestic economy’s potential (potential GDP reached an all-time high of 4.5% year on year in 2005, the year the Accession Treaty was signed).

In nominal terms, Romania’s GDP doubled between 2001 and 2006 and tripled between 2001 and 2008. In 2016, GDP stood at over EUR 165 billion, EUR 40 billion above the 2007 level and 68% higher than in 2006.

From a real-economy perspective, European economic integration has been a catalyst for convergence towards the EU average. As the chart below shows, the path of GDP per capita—a yardstick for convergence—indicates that Romania has been the champion of economic convergence among the Central and Eastern European countries. This indicator has risen by more than 90% over the past two decades, a trend driven by EU accession.

On the other hand, any stocktake of the first decade of EU membership must also note the adverse consequences.

Thus, the labour force has declined by over 7% in the past decade and by 14% in the past 15 years (including the pre-accession period).

Public debt as a share of GDP also tripled in Romania’s first decade in the EU (from 12% in 2006 to roughly 39% in 2016).  

Total external debt also increased sharply, from EUR 21.5 billion in 2004 to EUR 30.9 billion in 2005, EUR 41.2 billion in 2006 and EUR 99 billion in 2012 (in 2016 it stood at roughly EUR 92 billion). 

In closing, we underline that the domestic economy’s performance over the past 10 years was strongly influenced both by Romania’s European integration and by the Great Recession (the most severe global economic-financial crisis in recent decades).

The crisis corrected the irrational expectation that EU membership would be a land of milk and honey, whatever the context, and at low cost.

At the start of 2017, we can say Romania has learned the lessons from the maturity tests it faced in its first EU decade. Consumers’ and companies’ prudence, the strong growth of exports to the EU and reduced reliance on external financing provide the basis for better economic performance in Romania in its second decade in the EU. However, macro-financial stability must be preserved through a balanced mix of economic policies.