Romania’s economy will rise by only 1% this year, after a moderate expansion estimated at 0.9% in 2025, according to the Autumn Forecast published by the Romanian state forecasting body, CNP. The growth will not accelerate greatly above 2% per annum in the coming years: 2.2% in 2027 after the worst part of the fiscal consolidation effort is over, and 2.4% in 2028. 

However, the growth rate will return closer to those of more mature economies, 2.1%, in 2029.

The moderate forecast will serve as an underlying assumption for the budget planning that the government is expected to draft in the coming month and submit to the European Commission as a key document under the Excessive Deficit Procedure (EDP). Credible planning followed by precise implementation is essential for the country to return to its fiscal consolidation trajectory and keep its investment-grade rating.

Considering the 3% of GDP impetus expected to be provided by the European financing under the Resilience Facility and Cohesion Plan, the authorities’ forecast is rather conservative. 

Compared to the growth rates of around 1% per annum in 2024-2026, the country’s economy is expected to gain momentum in 2027-2028, however, at rates half as high as those seen as normal only two years ago. Pending the end of the war in Ukraine, the economic outlook for Romania may improve as well - but as of now, more optimistic growth expectations would be unfounded.

CNP expects the gross fixed capital formation, +5% last year and +4% in 2026, to support the economic growth in the short term, while both the private and public consumption would keep diminishing in 2026 after a marginal 0.1% contraction in 2025.  

Over the medium-term perspective, the consumption is seen as resuming its growth in line with the GDP growth above 2% per year. But the domestic consumption correction will have brought the current account (CA) deficit under 6% of GDP by that time, according to the CNP forecast (5.9% in 2028 and 5.8% in 2029).

While the employment will not increase this year, CNP expects the number of employees to rise at rates of over 1% per year in each of the following years. After 0.9% decline in the real average wages last year, households will see another shock (-1.1%) in their budgets before their earnings return at healthy growth rates of 3% in 2027 and above 2% per annum (in real terms) in 2028-2029.

iulian@romania-insider.com

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