**Rising Startups and Rising Insolvencies: Romania’s Mixed Economic Landscape in the EU**

Bucharest, Romania – August 20, 2025 – Romania is experiencing a paradoxical economic moment: a meaningful increase in new company registrations alongside a concerning uptick in business insolvencies. Recent data released by Eurostat on August 18,2025,reveals that Romania secured the third-highest growth rate within the European union for new businesses during the second quarter of the year,registering a 19% increase compared to the preceding three-month period.

This surge in entrepreneurial activity mirrors a broader European trend, with the Netherlands and Spain leading the way, posting growth rates of 57.7% and 27.6%, respectively. Despite ongoing global economic uncertainties and inflationary pressures, a wave of optimism is driving individuals across Europe to invest in new ventures. However, the picture isn’t uniformly bright. Several EU member states, including Denmark, Cyprus, and Germany, have seen a contraction in new business formations – highlighting a fragmented economic landscape.

Sectoral Shifts: Where is the Growth Concentrated?

The Eurostat report provides a granular view of which sectors are fueling Romania’s entrepreneurial spirit. The transport sector is experiencing a boom, increasing by 13.1%, driven by the expanding e-commerce market and increased demands on delivery networks, alongside evolving cross-border trade routes. Information and communications have also seen significant growth, with an 8.2% rise, solidifying Romania’s position as a regional hub for IT outsourcing and attracting both domestic and foreign investment.

financial services, notably Fintech start-ups and micro-finance institutions, are also gaining momentum, with a 5.2% increase. Investor confidence in financial innovation and digital banking appears strong. Interestingly, the industrial sector has remained stagnant, with no change in the number of new companies. Analysts attribute this to elevated energy costs and persistent disruptions in industrial supply chains, deterring investment in customary manufacturing.

Insolvencies on the Rise: A Counterbalancing Trend

While new business creation is flourishing, Romania is facing a parallel challenge: a substantial increase in company insolvencies.Across the EU, bankruptcies rose by 1.7% in the second quarter of 2025. Romania is among the most affected, with a 17.7% surge in insolvencies-the fourth-highest increase in the EU. Only Latvia, Cyprus, and Slovakia experienced more significant increases.

Conversely, Estonia, Spain, and Sweden managed to curtail insolvencies, demonstrating varying levels of economic resilience across the bloc.This disparity underscores a precarious situation, where entrepreneurial enthusiasm is countered by the financial struggles of existing businesses.

Insolvency Rates Chart” width=”1024″ height=”576″>

Sectoral Vulnerabilities: Which Industries are Most Affected?

The eurostat data reveals that certain sectors are particularly vulnerable to insolvency. The information and communications sector, despite its growth in new registrations, has also seen a sharp rise in bankruptcies, hinting at intense competition and potential cash flow issues. Construction companies are also struggling, hampered by rising material costs and labor shortages.

A notable exception is the accommodation and food services sector, which experienced a decline in bankruptcies thanks to a resurgence in tourism and domestic travel. Retail and wholesale trade also showed resilience, despite broader economic pressures.

Sector	New Business Registration Growth (%)	Insolvency Increase (%)
Transport	13.1	N/A
Information & Communications	8.2	13.6
Financial Services	5.2	N/A
Construction	N/A	8.1
Accommodation & Food services	N/A	-7.5

Historical Context: navigating Economic fluctuations

The current situation mirrors broader economic trends observed since 2018. From 2018 to 2019, new business registrations across the EU experienced slow but steady growth. The onset of the pandemic in 2020 caused a significant downturn, followed by a recovery in late 2020 and 2021, spurred by government stimulus packages. from 2022 to 2024,registrations surged,reaching levels not seen since early 2018. The volatility continued into 2025, with a dip in the first quarter and a rebound in the second quarter, driven in part by Romania’s performance.

Insolvencies followed an inverse pattern: declining in 2020 due to government protections, rising from 2021 to 2024 as support measures waned, and remaining elevated in 2025, reaching levels last seen in 2018.

Did You Know? romania’s strategic geographic location and relatively low labor costs have made it an increasingly attractive destination for foreign investment, particularly in the IT and manufacturing sectors.

Pro Tip: Entrepreneurs considering entering the Romanian market should conduct thorough due diligence and develop robust financial plans to mitigate the risk of insolvency.

The Eurostat findings paint a nuanced picture of the Romanian and wider EU economies. While entrepreneurial spirit remains strong, financial vulnerabilities persist.Policymakers in Romania must strike a balance between supporting new businesses and preventing existing ones from failing, perhaps through enhanced access to financing, tax incentives, and sector-specific support measures.

Frequently Asked Questions about Romania’s Economic Situation

• What is driving the increase in new businesses in Romania? A combination of factors, including a skilled workforce, strategic location, and government incentives, is attracting entrepreneurs to Romania.
• Why are insolvencies rising in Romania despite the growth in new businesses? Existing businesses are facing challenges such as rising energy costs, supply chain disruptions, and increased competition.
• Which sectors in Romania are most vulnerable to insolvency? The information and communications,and construction sectors are currently experiencing the highest rates of insolvency.
• What is the EU doing to address the rise in insolvencies? The EU is providing financial support and implementing policies to promote economic stability and encourage investment.
• how does Romania’s economic performance compare to other EU countries? Romania is currently one of the fastest-growing economies in the EU, but it is also experiencing a higher rate of insolvencies than some of its peers.

What impact will these trends have on romania’s long-term economic outlook? And how can policymakers best navigate this complex landscape to foster sustainable growth?

what are the primary factors contributing to the recent increase in company insolvencies in Romania?

The Romanian Startup Boom: A Hotspot for Innovation

Romania has emerged as a significant hub for startups within the European union, particularly in sectors like IT, fintech, and e-commerce. Several factors contribute to this growth:

Skilled Workforce: A large pool of technically proficient and relatively affordable labor. Romania boasts a strong educational system focused on STEM fields.

EU Funding Opportunities: Access to EU funds and grants designed to stimulate innovation and entrepreneurship. Programs like those outlined on Nations Online Project – Romania highlight the country’s integration within the EU economic framework.

Government Incentives: Tax breaks and other incentives aimed at attracting foreign investment and supporting local startups.

Growing Venture Capital scene: While still developing, the venture capital ecosystem in Romania is expanding, providing crucial funding for early-stage companies.

Strategic Location: Romania’s geographic position offers access to both Western and Eastern European markets.

This surge in entrepreneurial activity is reflected in the increasing number of registered companies and the growing investment in Romanian tech startups. Key cities like Bucharest, Cluj-Napoca, and Timișoara are leading the charge, fostering vibrant startup communities. The focus is increasingly on scaling businesses and attracting international attention.

The Shadow Side: A Rise in Insolvencies

Despite the positive startup narrative, Romania is simultaneously experiencing a concerning increase in company insolvencies. This creates a paradoxical economic landscape. Several contributing factors are at play:

Inflation and Economic Slowdown: High inflation rates across the EU, coupled with a general economic slowdown, are putting pressure on businesses, particularly SMEs.

Energy Crisis: The energy crisis, exacerbated by geopolitical events, has considerably increased operating costs for many companies.

Supply Chain Disruptions: Ongoing supply chain issues continue to disrupt production and increase costs.

delayed Payments: A persistent issue in the Romanian economy, delayed payments from both public and private sectors contribute to cash flow problems for businesses.

Increased Debt Levels: Many companies took on debt during the pandemic to stay afloat, and are now struggling to repay it amidst rising interest rates.

Data from romanian courts shows a significant uptick in insolvency proceedings, impacting a wide range of sectors, including construction, retail, and manufacturing. This trend poses a threat to economic stability and job creation.

Sectoral Disparities: Where are the Risks and Opportunities?

The impact of these economic forces isn’t uniform across all sectors.

IT & Tech: While generally resilient, even the tech sector isn’t immune. Startups reliant on external funding may face challenges in a tightening investment climate. Though, demand for IT services remains strong.

Construction: Heavily impacted by rising material costs and delayed projects, the construction sector is experiencing a high number of insolvencies.

Retail: Consumer spending is down due to inflation, putting pressure on retailers. Online retail is proving more resilient, but brick-and-mortar stores are struggling.

Manufacturing: Facing increased energy costs and supply chain disruptions, manufacturers are finding it arduous to maintain profitability.

Tourism: While recovering from the pandemic, the tourism sector remains vulnerable to economic fluctuations and geopolitical instability. Romania’s tourism potential, as highlighted by resources like Nations Online Project – Romania, is significant, but requires sustained investment and stability.

Navigating the challenges: Strategies for Businesses

Businesses operating in Romania need to adopt proactive strategies to navigate this challenging economic environment.

Cost Optimization: Identify and implement cost-saving measures across all areas of the business.

Diversification: Explore new markets and diversify product/service offerings to reduce reliance on a single source of revenue.

Financial Management: Implement robust financial planning and cash flow management practices.

Debt Restructuring: Explore options for restructuring debt to improve affordability.

Government Support: Leverage available government support programs and incentives.

Digital Change: Invest in digital technologies to improve efficiency and reach new customers.

The Role of EU Funds and Regional Growth

EU funds play a critical role in supporting Romanian businesses and mitigating the impact of economic challenges. Funds are available for:

1. Innovation and R&D: Supporting the development of new products and technologies.
2. SME Competitiveness: Helping SMEs improve their competitiveness and access new markets.
3. Infrastructure Development: Investing in infrastructure projects that support economic growth.
4. Green Transition: Funding projects that promote sustainability and reduce carbon emissions.

Effective utilization of these funds is crucial for fostering long-term economic resilience.Regional development initiatives, focusing on areas outside of Bucharest, are also essential for creating a more balanced and sustainable economy.

Insolvency Procedures in romania: A Practical Overview

Understanding the insolvency process is vital for businesses facing financial difficulties. The key stages include:

Preventive Restructuring: Aims to avoid insolvency through negotiation with creditors and implementation of a restructuring plan.

* Insolvency Proceedings: Initiated when a company is unable to pay its debts.