Capital Economics says political context puts Romania's modest economic growth at risk

Capital Economics expects moderate growth in Romania's GDP this year and in 2026, of 1.8% and 2.3%, respectively, according to Curs de Guvernare.

"The political context poses a major risk to the economic outlook, given the divisions within the governing coalition and the increase in support for the far right ahead of the rescheduled presidential elections," according to the think tank's report on Central and Eastern Europe.

Capital Economics analysts have revised their GDP growth forecasts for most countries in the region upwards for this year, considering that economies will accelerate in 2026 despite the obstacles generated by the tariffs imposed by the US.

However, Romania stands out as a laggard with a modest advance in economic activity, a consequence of the slowdown in demand and the expected fiscal consolidation measures.

"We expect the budget deficit to narrow to 7.5% of GDP this year (from 8.6% in 2024), but this level will keep public debt on a sharp upward trajectory," the analysts argue.

This year, the current account deficit will remain high (7.8% of GDP), keeping Romania heavily dependent on capital flows.

"We expect the Central Bank (BNR) to manage a 3% depreciation of the national currency, to 5.15 lei/euro, by the end of 2025. However, a loss of investor confidence in the political or fiscal situation could cause a steeper depreciation," Capital Economics analysts warn.

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