|In Europe, investors going east|
BANEASA, Romania — A billion-dollar real-estate development in former plum orchards north of Bucharest illustrates the fruits being picked in Romania and Bulgaria, future European Union (EU) members seeing an economic boom while much of old Europe stagnates.
Romania and southern neighbor Bulgaria economies have been expanding rapidly since 2000. Economic growth is expected to hover at about 6 percent for the next three years in both countries, with Bulgaria seeing lower inflation.
"Romania and Bulgaria are perceived as the new forces," said Radu Craciun, an analyst at ABN Amro. "Due to their geographical positions they have better access to the Middle East, Russia and the Balkans."
Both are scheduled to join the EU in 2007. While both countries have easy access to EU markets, a postponement would delay EU funds for infrastructure improvements and rural development. But it wouldn't have a major impact on large investors, Craciun said, because they take a long-term view.
Bulgaria, while smaller, also has emerged as an attractive destination for foreign investors, mainly because of its economic stability. Direct foreign investment reached $2.49 billion in 2004, up 14.2 percent from 2003, one of the highest per-capita investments in the region.
The increasing investment and the expectation of EU membership have led to a real-estate boom in Bulgaria and Romania, with prices doubling in the past few years before appearing to level off recently.
Despite relatively low monthly wages by EU standards, the domestic markets in Bulgaria and Romania also are becoming attractive because of a high consumer appetite for electronics, appliances, cellular phones and new cars.
The economic boom is not evenly distributed, however, with a strong concentration of investment in urban areas and around Bulgaria and Romania's Black Sea coasts.