EBRD expects mild 0.2% economic contraction in Romania this year

Following a contraction in the first quarter of 2026 on declines in household consumption and industrial production, the European Bank for Reconstruction and Development (EBRD) revised down Romania’s 2026 growth outlook to negative 0.2% under its June Regional Economic Prospect report, while a modest 1.8% y/y growth is envisaged for 2027.

The government of Romania also revised its 2026 growth expectations to a modest 0.1% under its May Forecast issued by the state forecasting body CNP.The expectations were revised from 1.0% y/y growth under the December CNP Forecast, used for the budget planning.

The downward revision reflects the impacts of the Middle East war, mediated by higher energy prices (higher inflation, hence lower consumption) and lower industrial activity. The fiscal consolidation and the political uncertainty are other negative factors in the case of Romania.

While consumer spending will remain constrained by ongoing fiscal adjustments and elevated inflation, investments could support growth, contingent on RRF absorption and a recovery in business confidence, the EBRD report reads.

Downside risks remain tied to potential deviations from the long-term fiscal consolidation path (any deviation would only provide short-term relief), volatile international trade, and prolonged political uncertainty.

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