According to the Regional Economic Outlook report released on Thursday, the international financial organization has worsened its GDP forecast for this year, now pointing to a 0.2% contraction in the economy.
In February, it had forecast growth of 1.2%. The new estimate comes after a contraction in the first quarter of 2026, driven by declines in household consumption and industrial production.
Romania’s GDP is expected to grow by 1.8% in 2027, down from the EBRD’s previous forecast of 2.2%.
The report notes that economic growth in 2025 was 0.7%, broadly in line with 2024, although the pattern of growth has changed.
“Private consumption stagnated almost completely amid a slowdown in real wage growth from 8% in 2024 to a 5% contraction from mid-2025 onwards. Public spending contracted by 11% year-on-year in the last quarter of 2025, affecting the annualized growth rate. At the same time, public investment reached 7% of GDP and net exports increased due to growth in exports of capital and intermediate goods,” the report said.
Inflation accelerated sharply in the second half of the year, reaching around 9.5% after the removal of electricity price caps in July 2025, a measure introduced at the same time as VAT and excise tax hikes. In April 2026, inflation rose again, reaching almost 11% on the back of higher energy prices. As a result, the National Bank of Romania kept its key interest rate at 6.5% until early 2026.
The state budget deficit fell from 9.3% of GDP in 2024 to 7.9% in 2025 and is expected to narrow to 6.2% in 2026.
“Due to the contraction of the economy in the first quarter of 2026, lower household consumption and industrial production, GDP forecasts have been revised, pointing to a 0.2% contraction in 2026 and 1.8% growth in 2027. While consumer spending will remain constrained by fiscal adjustments and high inflation, investment could support growth, subject to absorption of EU funds from the Recovery and Resilience Fund and a rebound in business confidence. Downside risks remain associated with potential deviations from the long-term fiscal consolidation strategy (any deviation would provide only short-term relief), volatile international trade and lingering political uncertainty,” the EBRD warns.
