Page 44 - bne_Magazine_May_2017_print

44 I Special focus bne May 2017
Investors jump on Romania’s consumer bandwagon
Clare Nuttall in Bucharest
Romania’s economy is set to be among the fastest growing in Europe this year, with expansion largely fuelled by consumption, driven in turn by tax cuts and public sector pay rises.
While these have raised concerns from the International Monetary Fund (IMF) and other observers over Romania’s growing budget deficit, they have result- ed in an ongoing boom in consumption that shows no signs of abating.
This is set to spur on GDP growth to 4.2% in 2017, the IMF has estimated – putting Romania second only to Iceland within Europe. The IMF recently raised its growth projection from the 3.8% it forecast in October 2016 – though it is still below the highly optimistic 5.2% expected by the Romanian government.
Retail sales have been booming in Roma- nia, expanding by a total of 42% since
www.bne.eu
January 2012, or an average of 9.2% per year. This was partly a consequence of the decision to slash VAT on food from 24% to just 9% in June 2015, followed by more modest cuts to the general VAT rate, which was most recently lowered to 19% in January.
Investors continue to show confidence that the Romanian consumer boom will continue. 2016 saw the local retail sec- tor’s biggest ever deal, when Mid Euro-
underscored the firm’s commitment
to Romania, and that Profi “has great potential to grow in the years to come, as Romania has many more areas to take modern retail to”. In March, the European Bank for Reconstruction and Development (EBRD) said it would sup- port the expansion of the supermarket chain with a €25mn equity investment.
Meanwhile, Delhaize’s Mega Image, which has the largest supermarket
“Romania has many more areas to take modern retail to”
pa Partners bought supermarket chain Profi Rom Food from fellow private equity investor Enterprise Investors for €533mn. Mid Europa partner Nikolaus Bethlen said at the time that the deal
network in Romania, announced plans to expand in the west of the country. Other retailers planning to grow are Germany’s Rewe, which exited its XXL stores but aims to double its Penny