I am happy to share with you our quarterly newsletter designed to provide key economic information and estimated impact for businesses. I hope you will find it useful, and it will help you stay informed with what matters the most.
Romania’s economic crossroads: growth constrained, pressures mounting
Romania’s economy has entered a period of uncomfortable recalibration. After impressive real GDP growth rates of 5.5% in 2021 and 4.0% in 2022, the country now confronts a sobering arithmetic: anaemic growth, resurging inflation, and a budget deficit that would have breached even the European Commission’s tolerance without the fiscal adjustments hastily adopted during summer 2025.
For business leaders navigating this landscape, the question is how prolonged and painful the correction will prove.
The 2024 slowdown was not entirely accidental. In an electoral year, the government deployed fiscal policy with characteristic vigour—boosting public sector wages, raising pensions, and maintaining generous subsidies. This was textbook pre-election stimulus: transfer income to households, inflate consumption, and postpone the reckoning until after the ballots are counted. The strategy left the economy overheated and the public finances badly stretched.
Romania’s growth riddle: when stimulus fails
The numbers tell a stark story. GDP growth collapsed to a meagre 0.8% in 2024 despite public investments (combining EU funds, including NRRP and national budget allocations) reaching 6.8% of GDP, the highest level in a decade.
This represents a deceleration revealing Romania’s growth model has stalled.
Forecasters project lower growth in 2025: the National Commission for Prognosis expects 0.6% -1% and the IMF 1.2-1.4% at best. These figures are the arithmetic of stagnation. Consumer confidence collapsed following the announcement of fiscal consolidation measures, reflecting pessimism about Romania’s economic trajectory.
More immediately, Romania must now begin preparing its 2026 budget—a process that promises to be considerably more fraught than usual. The government faces an unenviable trilemma: cut spending further and risk choking off the nascent recovery, raise taxes and deepen business pessimism, or maintain deficits and invite escalating confrontation with Brussels.
The 2026 budget will be less a planning exercise than a stress test of Romania’s capacity for economic realism.
Inflation resurgence
Inflation has reversed sharply and is eroding consumer purchasing power. After falling to 5.5% in May 2025, consumer prices surged to 9.9% by September. The breakdown is painful for both household budgets and companies: food inflation at 7.9%, non-food at 11% (driven by the removal of electricity price caps in July, higher excises, and pass-through effects on businesses), and services at 10.4%. The central bank, which had cautiously cut rates to 6.5%, has now paused its easing cycle until the fiscal picture clarifies.
The fiscal picture remains Romania’s Achilles heel
The government scrambled to adopt a package of tax increases and spending cuts, yet the fiscal targets keep slipping. The original 2025 budget envisaged a deficit of 7% of GDP.
By summer, this had been revised to 7.7% in negotiations with ECOFIN. Following the latest budget rectification, the projection now stands at 8.4%.
This matters beyond the immediate numbers. Romania has pledged to bring its deficit below the Maastricht ceiling of 3.0% by 2031, a trajectory requiring an average annual consolidation of roughly 0.9 percentage points from the projected 8.4% in 2025.
While ambitious, this pace is not unprecedented among EU member states, though it demands sustained political commitment and economic cooperation.
Nine months into 2025, the deficit stands at 5.4% (cash methodology). The challenge now is credibility: can Romania demonstrate the institutional discipline required for multi-year consolidation, or will it cycle through repeated target revisions?
The answer has practical implications for business. Persistent fiscal uncertainty typically brings heightened scrutiny from ratings agencies, wider sovereign spreads, and a more cautious regulatory environment.
Companies planning medium-term investments in Romania must price in a higher degree of policy volatility than might be expected in more fiscally stable jurisdictions—not an insurmountable obstacle, but a material consideration nonetheless.
The second fiscal package’s surprises
The second fiscal package includes other tax increases despite the expectation to be focused on spending reductions. The minimum turnover tax, expected to be eliminated, remains applicable for tax payers with turnover exceeding EUR 50 million.
Additionally, a deductibility cap of expenses for intellectual property rights, management and consultancy services incurred with non-resident affiliates was introduced.
There are also increases in local taxes (e.g.land tax, building tax– especially for individuals, vehicle tax) via increase in taxable value and/or elimination of certain exemptions.
Labour market pains
The minimum wage debate has become Romania’s contentious economic flashpoint. Over five years, the gross minimum wage has almost doubled. Now comes the January 2026 decision.
Yet the government’s hesitation reflects genuine constraints. Raising the minimum wage would boost tax revenues through higher personal income tax and social contributions, providing fiscal relief.
But if the increase triggers business closures—particularly among smaller enterprises employing the bulk of minimum-wage workers—the indirect costs would likely exceed any revenue gain.
Good News: Romania, very close to OECD accession
Romania has received 16 Formal Opinion in the OECD accession process, with 9 more left.
The secretary of state coordinating OECD accession, Mr Luca Niculescu, is very confident, as he has stated recently, that Romania has great chances to join the organization next year as the process goes on very smoothly.
For the business environment, Romania’s accession to OECD is truly important as the membership stands as a certificate of trust for investors. There are very large investment funds that only enter OECD member markets, for example.
Golden Visa: An Opportunity for Investors
A draft law initiated in Parliament might provide non-EU citizens a chance to secure a five-year renewable residence permit in exchange for a minimum investment of €400,000.
