Europe looks East for opportunities

On the first of January, Romania and Bulgaria became the 26th and 27th countries to join the European Union. Guillaume Rambourg, co-manager of the Gartmore European Selected Opportunities Fund and the Gartmore SICAV Continental European Fund, believes the EU’s latest expansion could create opportunities for European companies, particularly in the energy sector.

“The integration of these two new member states has been an ongoing process for the last decade as trade barriers have come down,” says Guillaume. “Therefore the economic and political impact of their actual accession will be limited. However, their geographical position means they are now ideally placed to act as a gateway between Western Europe and energy-rich central Asia. Romania acts as a bridge to Eastern Europe and Bulgaria as an entry point to the Balkan and Black Sea region. The fact that both banks of the River Danube, a potential route for oil pipelines, are now within the EU could be very beneficial in the long-term.

“Romania and Bulgaria’s inclusion in the EU could also be advantageous for the rest of Europe due to the speed at which their economies are expanding and their ability to provide a low-cost workforce. In the third quarter of 2006, Romania’s economy grew at an annualised rate of 8.3%, helped by higher earnings and borrowing, which fuelled spending on construction, services and shopping. This compares to GDP growth of 6.7% for Bulgaria, with the economy of the Eurozone growing at 2.7% over the same period. Western European companies stand to profit as they are well placed to capitalise on rising demand for consumer products and lower labour costs.”