2 May 2012 - romania-insider.com

Increasing foreign interest in Romania’s agricultural lands recently got international media attention with French newspaper Le Monde publishing a piece about foreign buyers of Romanian agricultural land.

The high prices for the agricultural land and the bureaucracy in Western Europe are cited among the reasons foreigners choose to buy land in Romania.

Maxime Laurent, a French Agriculture graduate decided to try his luck in agriculture in Romania, according to Le Monde. He bought some land in Macesu de Sus, in Dolj county, 10 kilometers away from the Danube. His parents didn’t manage to buy more land in France because of the obstacles imposed by the French authorities, so he decided to try Romania, according to Le Monde.

The journalists from “Le Monde” are saying that this should not come as a surprise, as Romania’s agricultural land is a sort of El Dorado for farmers from Great Britain, France, Germany, Italy or Denmark.

The Laurent family invested in agriculture at Macesu de Sus because the field was near the Danube. In Dolj, the Laurent family produces wheat, barley, sunflower and rapeseed. Le Monde highlights that prices for agricultural land in Romania are around EUR 2,000/ha, much less than in Western Europe.

Foreign investors have managed to buy 700,000 ha of agricultural land in Romania – or some 8.3 percent of the country’s total of arable area.

 

May 23, 2012 - romania-insider.com

South Korean company Hyosung intends to invest some USD 150 million in Romania to build a tire and airbag factory in the country.

The investment could soon be launched, according to Romania’s Economy, Trade and Business Environment Ministry.

The project was already discussed by the management of Hyosung Corporation with Lucian Isar, the delegate minister for the business environment, who was in Korea on May 21 and 22.

Hyosung is listed on the Seoul Stock Exchange, with a market capitalization of around USD 1.2 billion.

The group has activities in textile, industrial materials, chemicals, heavy industry, construction, car imports and financial services. It is also known for the Hyosung bikes, which it no longer produces, after having sold the division to S&T.

 

August 27th, 2012 - seenews.com

BUCHAREST (Romania), August 27 - Romanian shopping centre operator Cocor [BSE:COCR] said it has agreed to sell two retail properties for a combined 4.0 million euro ($5.0 million).

The company has agreed to sell a 100.89 square metre retail space for 2.09 million euro and a 95 square metre property for 1.9 million euro, Cocor said in a statement on Friday.

The sale agreements are pending approval by the company's shareholders at a meeting scheduled for October 8.

In July, Cocor said it plans to sell its main shopping centre, located in Bucharest's downtown, for 50 million euro and several other properties in order to repay a loan taken from local bank BCR.

 

July 25th, 2012 - business-review.ro

State-owned China Huadian Engineering successfully bid for an energy project in Romania and will invest USD 1 billion to build a 500 MW coal-fired plant in the Rovinari Energy Complex that will create 500 new jobs, according to the Ministry of Economy.

A technical team of the Chinese firm went to Rovinari on Monday and will set up the project company that builds the power unit.

The ministry said this investment will create over 500 new jobs in an area that doesn’t have a lot of employment opportunities.

China Huadian Engineering Co ranks among the five largest Chinese companies active in the energy sector, both in production and construction. The power company has build 212 power plants in Asia and has ongoing projects in Turkey.

 

September, 18th 2012 - romanianewswatch.com

They may not be celebrating on the streets of Bacau or Brasov but Romania has been doing pretty well of late. GDP grew by 1.2 per cent year-on-year in the second quarter for a start.

More fundamentally, says IHS Global Insight, there has been progress on the fiscal deficit and the country’s trade deficit, which was about 11 per cent of GDP before the global recession but has since settled around 4 per cent of GDP. Based on that progress, the US-based information provider has just upgraded Romania’s short- and medium-term sovereign credit worthiness by one notch – bringing Romania’s medium-term rating up to investment grade.

The question is, will the good times last?

This year alone Romania has gone through three governments and has seen a public row erupt between prime minister Victor Ponta and Traian Bašescu, the largely ceremonial president. But Chuck Movit, IHS Global Insight’s economist for Romania is cautiously bullish.

Sure, he downplays his own upgrade, noting that both Fitch and Moody’s also rank Romania at minimum investment grade (only Standard & Poor’s has Romania at the highest junk levels). He also stresses the need to stick to the fiscal and monetary policy paths agreed with International Monetary Fund and European Union under the terms of a €20bn standby loan granted in 2009, and is not shy about problems at Romania’s banks, many of which made loans in foreign currencies before the crisis weakened the leu.

He writes:

Romania still scores risk due to the size of its external financing needs relative to its foreign-exchange earnings, as well as on the size of its banking sector’s liabilities to BIS [Bank of International Settlement]-area banks relative to assets vis-à-vis those banks.

But, in his assessment, crucially, the country “no longer scores risk” on its current-account balance.

Throughout the first seven months of 2012, Romania’s merchandise trade deficit has been essentially unchanged from a year earlier, despite a very negative external economic environment. Although merchandise exports only edged up year-on-year (y/y) during July, the trend in merchandise imports was very similar. In that period, improvements in balances on trade in factor and non-factor services and in net current transfers trimmed the current-account deficit by more than 35% compared with a year earlier.

We project the current-account deficit on average in 2012–2014 to average no more than 2.8 per cent of GDP. If we look at only the part of the current-account deficit that we do not anticipate to be financed by inflows of foreign direct investment, the projected ratio to GDP in 2012–14 on average shrinks to just -0.8 per cent.

Movit argues the future also looks positive. Strong foreign direct investment flows through much of the previous decade have helped improve competitiveness dramatically. Hence, provided western Europe returns to growth by 2013, demand for Romanian exports and incoming FDI will again be on the rise.

Not all are quite so sanguine, however.

Peter Attard Montalto of Nomura in London notes that Romania’s economy is healthier than those of its neighbours, typically suffering negative growth of about 1 per cent. That performance is especially creditable given recent austerity measures, political rifts and Romania’s exposure to the EU periphery.

But Montalto reckons a sharp downturn is inevitable before any modest improvements can be expected next year.

Critically, export growth has dropped to near zero, causing a slowdown in industrial production and exposing “a weaker underlying picture in the economy than the headline numbers suggest”.

Rather than investment kicking in and boosting exports, Montalto sees waning exports leading to reduced disposable income and domestic consumption, plus a downturn in investment.

Employment growth has already started to turn, but as inflation remains sticky given non-core pressures and wage growth also comes under more pressure in this environment, consumption could fall back. Investments should also start to slow from such a fast pace as we reach the end of the current EU funding window.

He says growth this year will be just 0.2 per cent and, even if the government eases the fiscal consolidation brake next year to provide some stimulus, this will “ultimately be unsustainable.” As a result, growth next year may only be 1.2 per cent, he writes.

That’s still not bad in the regional context, but it may still not feel like much for the many households struggling to survive in a Romania under austerity.

As the otherwise upbeat Movit puts it in one cautionary sentence:

Should the political tensions over austerity measures result in a dysfunctional government that is unable to continue to pursue these [consolidation] policies, our view of creditworthiness would suffer considerably.

In other words, Romania needs to hang on and hang in there, or all the good achieved thus far could yet come undone.

 

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