After real GDP growth of 0.7% in 2025, the Romanian economy is set to broadly stagnate in 2026, before rebounding at 2.3% in 2027. Fiscal consolidation efforts and persistently high inflation driven by rising energy prices are set to significantly reduce domestic consumption. Meanwhile, EU-funded investments and net exports are contributing positively to growth. The rebound in 2027 is backed by expectations of lower inflation and more favourable financing conditions. Unemployment will moderately pick up in 2026 before receding in 2027. The current account deficit is set to decline to 6.4% of GDP over the forecast horizon. After reaching 7.9% of GDP in 2025, the general government deficit is projected to narrow to 6.2% of GDP in 2026 and 5.8% of GDP in 2027, while the debt-to-GDP ratio is set to increase to 63.3% by 2027.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 0.7 | 0.1 | 2.3 |
| Inflation (%, yoy) | 6.8 | 7.0 | 3.7 |
| Unemployment (%) | 6.1 | 6.3 | 5.9 |
| General government balance (% of GDP) | -7.9 | -6.2 | -5.8 |
| Gross public debt (% of GDP) | 59.3 | 61.6 | 63.4 |
| Current account balance (% of GDP) | -7.9 | -6.9 | -6.4 |
Falling domestic consumption weighs on growth
In 2026, the on-going fiscal consolidation and high energy price inflation are likely to further depress real disposable income, leading to a decline in both domestic consumption and imports of goods. Economic sentiment, in particular consumer confidence, has deteriorated further since the start of 2026 and high frequency indicators point to a significant decline in retail sales, industrial output and domestic tourism. Exports are expected to decelerate, while still growing moderately and leading to a small positive contribution to growth from net exports.
After a turnaround in 2025, gross fixed capital formation is projected to accelerate further in 2026. The recovery in residential construction is expected to continue, while investment in public infrastructure is set to pick up as RRP projects are completed. Increased investor apprehension, triggered by geo-political risks and domestic political uncertainty, is likely to weigh on private investment in the first half of the year. However, confidence is expected to gradually recover, reinforcing the recent pick-up in foreign direct investment. Overall, real GDP growth is projected at 0.1% in 2026.
A rebound in real GDP growth to 2.3% is forecast in 2027, as the freeze on public wages and pensions ends and lower HICP inflation stabilises disposable income, supporting a turnaround in private and public consumption. Government investment is projected to decelerate following the end of the RRF, but private investment is set to take over, underpinned by improved investor sentiment and better financing conditions. The current account deficit is projected to gradually decrease towards 6.4% of GDP by 2027. Domestic risks to growth are tilted to the downside as rising domestic political instability undermines investor confidence in the fiscal adjustment path.
Unemployment set to rise
After several years of tight labour market conditions, employment started to decline in 2025 and is set to continue along this trend in 2026. This will lead to a moderate increase in the unemployment rate to about 6.3% in 2026. With public sector wages frozen in 2025 and 2026, the growth of nominal compensation of employees has fallen to single-digit rates. As inflation remains high, real unit labour costs are expected to fall, supporting cost competitiveness. The moderate pace of wage increases is projected to continue in 2027.
Disinflation slowed by the hike in energy prices
Before the conflict in the Middle East, headline inflation was expected to decelerate at a fast pace in the second half of 2026 supported by strong base effects. However, the conflict and its impact on energy prices have slowed down this trend. HICP inflation is now forecast to average 7% in 2026, up from 6.8% in 2025, before decelerating to 3.7% in 2027, coming close to the NBR target range (2.5+/-1%). Government measures, including the postponed liberalisation of gas prices for households, have somewhat mitigated the energy price increase.
Government deficit to decline further
Romania’s government deficit declined to 7.9% of GDP in 2025, down from a peak of 9.3% in 2024. This improvement reflects the implementation of several fiscal consolidation packages between December 2024 and September 2025, including a nominal freeze in wages and pensions in 2025 and 2026 and tax increases.
The deficit is projected to decline further to 6.2% of GDP in 2026. Public investment is projected to increase from 6% to nearly 7% of GDP. In parallel, current expenditure as a share of GDP is set to decline, reducing total government spending by about 0.3% of GDP. On the revenue side, the implementation of tax increases adopted in 2024 and 2025 is set to increase revenues by 1.4 pps of GDP. In 2027, the deficit is projected to decline to 5.8% of GDP, driven by cuts in public capital expenditure. The fiscal stance was contractionary in 2025 and is set to moderate in 2026, before turning neutral in 2027. Defence expenditure is projected to increase from 1.5% of GDP in 2025 to 1.8% of GDP in 2027, supported by loans under the SAFE programme.
Government debt is projected to increase from less than 55% of GDP in 2024 to about 63% of GDP in 2027, mostly driven by high government primary deficits and interest payments.