Romania’s Economic Sentiment Indicator, or ESI, a composite indicator designed to track GDP growth calculated as a weighted average of the balances of replies to selected questions addressed to firms in five key economic sectors, plunged in July to 94.7 – the lowest level since January 2021, according to Eurostat.
Romania’s ESI dropped below the 100-point benchmark, which indicates balanced expectations, in May 2025 after nearly two years above the benchmark, in line with a broader pattern across the European Union. Romania’s sentiment indicator has dropped (marginally) below the EU average in July, for the first time after three years.
The announced fiscal consolidation measures eroded confidence across all sectors, Erste Research said in a research note.
The confidence in retail trade (-5.5, the balance of positive replies per 100 subjects) plunged to the lowest level since the end of the first wave of the COVID-19 pandemic, but all five economic sectors monitored under ESI, except for the services sector, posted negative dynamics in July.
The balance was -2.0% in industry (among the weakest post-pandemic readings) and -9.4% in construction (the weakest since Q3 2022). In the sector of services, the balance (2.2) also dropped to the post-pandemic weakest value, but remained in the positive region. The worst performance (-31.4) was posted by the consumer confidence, the fifth dimension measured by ESI.
Separately, the consumer confidence balance sank to -31.4% (net positive replies per 100 subjects), the lowest level since June 2022 (amid the outbreak of the war in Ukraine), with both past and expectation components weakening this month, according to Eurostat data.
The deterioration is largely attributed to the fiscal consolidation package announced by the government at the beginning of July. The package includes increases in VAT rates and excise duties starting from August 1 that are expected to erode the future disposable incomes, along with the expiry of price caps on electricity prices, which took place this month.
The balance of replies regarding the dynamics of the general economic situation plunged to -43.3 in Romania in July, with only Greece and Hungary with balances of under -46 more pessimistic. The EU average was -28.6, with all the member states in the negative (pessimistic) region, with only Czechia and Lithuania being the most optimistic (-11).
(Photo: Oleg Kachura/ Dreamstime)
iulian@romania-insider.com
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