Romania’s fiscal consolidation efforts cut the growth stimuli exactly at a time when the growth model in Central and Eastern Europe (CEE) turns to one driven by internal factors, which will result in the country displaying one of the lowest growth rates in the region, according to UniCredit Bank economist Anca Negrescu. Romania’s economy will increase by only 1% this year and 1.8% in 2026, according to the latest macroeconomic report of the UniCredit Group Investment Institute.
The revised forecast indicates 0.5 percentage points negative revision for this year’s growth, from 1.5% previously, and 0.3 pp negative revision for 2026, from 2.1%, respectively.
“We believe that Romania will maintain its rating in the investment-grade category if there are no major delays in implementing the government program and if we see the first improvements in fiscal terms,” said Anca Negrescu, quoted by Ziarul Financiar, touching on one of the hottest topics on the analysts’ agenda these days.
Under the effects of the VAT rate upward revisions in 2025 and possibly in 2026, inflation will remain above 5% at the end of the year compared to 5.45% y/y in May and 4.6% under the central bank’s yearend projection, not including the government’s latest decision on abandoning preferential VAT rate for most of the goods and services.
The headline inflation will remain above the 3.5% upper limit of the 2.5%+/-1pp inflation band at the end of 2026 under the Unicredit revised scenario that envisages possible upward adjustment of the VAT rates next year. The central bank’s forecast envisages 3.4% y/y inflation at the end of 2026 – again, not including potential VAT rate hikes.
In this context, Unicredit anticipates a single reduction in the monetary policy rate by the National Bank of Romania (BNR) in 2025, of 0.25 pp in November. However, rising risks suggest that monetary easing could be postponed to 2026.
According to Unicredit estimates, after the exchange rate stabilizes in the range of RON 5.00–5.10 to EUR, the local currency (leu) is expected to evolve slightly within this band until the end of the year, with an estimated level of RON 5.07 in December.
iulian@romania-insider.com
(Photo source: Andersastphoto/Dreamstime.com)
Leave a Reply