As we begin this year, I am happy to share with you our quarterly newsletter, designed to provide key economic insights and an overview of the expected impact on businesses.
This edition highlights several important themes shaping Romania’s business landscape in 2026. Thank you for taking the time to explore it. I hope it helps you stay informed about what matters most. If you have any questions or would like to discuss any of these topics further, I would be delighted to continue the conversation.
Romania’s economic recalibration
Economic growth: improving perceptions, persistent challenges
Romania’s 2025 economic growth forecast improved to 1%, above mid-year projections, as investors and international institutions adopted a more constructive view following fiscal consolidation. Main contributors to the growth were construction and agriculture, one depended on EU funding and the other having a base effect, while services and industry have shown limited performance. An important issue is that structural weaknesses persist, as consumption-led policies since 2015 stimulated demand without building supply capacity, undermining competitiveness and accumulating external deficits.
The public investment paradox remains as despite record public investment (7.2% in 2025) and improved EU funds absorption, growth impact is reduced, reflecting efficiency challenges.
The outlook for 2026 and 2027 offers modest encouragement (~ 1% in 2026 and 2.2-2.5% in 2027). The recovery will depend on whether investment momentum can be sustained after NRRP funding concludes, and whether consumption compressed by two years of real wage declines can rebound without impacting the external imbalances.
Inflation: painful presence, moderating future
Inflation closed 2025 at 9.7% yoy, with the annual average reaching 7.3%, substantially higher than 2024’s 5.6%. The National Bank of Romania anticipates disinflation through 2026, driven partly by subdued domestic demand as fiscal consolidation weighs on household purchasing power.
Fiscal consolidation: credibility regained
Perhaps 2025’s most encouraging development is budgetary performance and the market’s response to it. Budget execution through November shows a cash deficit of 6.4% of GDP, down from 7.1% in 2024. The full year 2025 deficit will likely land at 8.0%, below the 8.4% target and improved from 2024’s 9.3%. Looking ahead, 2026’s official target of 6.4% of GDP appears achievable, but that depends on balancing consolidation with growth.
Tax year-end adjustments
A signal to companies that fiscal pressure could ease in 2026 is conveyed by the Government Emergency Ordinance 89/2025. The halving of the minimum turnover tax (IMCA) starting in 2026, along with its elimination as well as the removal of the specific turnover tax (ICAS) and the tax on special constructions from next year, shows that the government aims to offer the business environment an optimistic horizon. You can find here a summary of the tax changes introduced by the ordinance.
Salary increases expected to decelerate in 2026
Private companies in Romania forecast an average 6% increase in base salaries in 2026, after a 7.47% rise last year, according to the PwC PayWell study. Companies in the industrial sector anticipate the highest rise in average salaries, of 8.33%, followed by pharmaceutical companies (6.92%) and retail (6.68%). By contrast, technology companies expect a 5.29% increase, the lowest among the sectors included in the study.
Looking ahead: discipline or drift?
Romania’s economic trajectory over the next twelve months will largely determine whether the country emerges as a disciplined, investment-grade economy positioned for convergence or remains trapped in low-growth purgatory. For business leaders, the message is cautious optimism tempered by realism.
From optimism to caution
We see this is a global trend, with our newly launched CEO Survey 2026 released on 19 January showing that caution has become the watchword.
Global CEO confidence in their companies’ revenue growth has dropped to a five year low, with only 30% optimistic about the next 12 months. Many leaders are struggling to convert significant investments, especially in AI, into consistent financial performance in a context of rapid technological change, economic pressure, and geopolitical uncertainty.
In Romania, CEOs have also turned more pessimistic amid weaker macroeconomic prospects and higher taxes, with only a third expecting the local economy to accelerate. Just 26% of Romanian executives are very confident in their companies’ revenue growth, as macroeconomic volatility, inflation, and geopolitical conflicts reemerge as top threats to their businesses. The CEO survey full report for Romania with very interesting insights will be released soon.
Global investors’ checklist in 2026
As business leaders worldwide expect only modest global GDP growth in the coming year, they concentrate more on company specific strategies, according to PwC’s Global Investor Survey.
Given the context, investors want CEOs to use technology to reinvent business models and drive efficiency, while carefully safeguarding cash flow.
Companies that clearly demonstrate how they are mitigating key risks-particularly cyber threats, technological disruption, inflation, macroeconomic volatility, and geopolitical conflict-will be best positioned to gain investor confidence.
What about AI skills?
Business model reinvention needs AI skills, but the employees in Romania are among the last when it comes to AI usage. According to PwC Workforce Hopes and Fears Survey, 44% of the Romanian employees have used AI in the past year, while the average usage rate across the countries in the report is 57%. Romania ranks 41st out of the 48 countries.
Key takeaways for 2026
Considering both global and local economic perspectives: What CEOs should monitor in 2026?
Macroeconomic Pressure Points: Leaders should closely track potential tax shifts, inflation dynamics, interest rate movements, and government spending corrections.
Managing geopolitical risk: Many companies treat geopolitical risks reactively. In an increasingly volatile global environment, a truly effective approach requires a holistic perspective, full Csuite engagement, and proactive planning for potential disruptions.
Read the full report about 7 things to consider to manage geopolitical risks.
Workforce Volatility and Skills Gaps: Workforce strategies must focus on retention, upskilling, leadership development, and clarity in communicating change, especially as digital and AI capabilities become essential.
Accelerated Digital Transformation and AI Adoption: AI is evolving from an efficiency tool into a core growth driver. Romanian and regional companies are moving toward hybrid teams—people and intelligent systems working together—and leaders must adapt their operating models accordingly.
Geopolitical Vulnerabilities: Romania remains exposed to broader European uncertainty. Leaders must stresstest supply chains, scenario-plan for external shocks, and leverage opportunities connected to strategic programs, particularly in defense, energy, and infrastructure.
Operational Efficiency as a Strategic Imperative: Efficiency is the top priority for Romanian executives in 2026. Digitalisation, automation, and simplification of operations will be critical levers to maintain competitiveness in a low-growth environment.
Investment Opportunities: Despite uncertainty, Romania continues to attract foreign investments and offers strong potential in energy transition, digitalisation, sustainability, and public-sector modernization.
Conclusion – Looking forward
As Davos unfolds, the central message for 2026 is clear: the global landscape is undergoing a rupture, not a transition. Geopolitical rivalry, protectionism, and shifting power dynamics are reshaping the economic environment and creating new uncertainties for businesses. Despite the fractures, Davos 2026 highlights the continued importance of open dialogue and collaboration to navigate this more fragmented world.
