The macroeconomic confidence index compiled by Romania’s CFA Society association of analysts, based on a survey among its members, plunged sharply by 7.3 points to 30.2 points, with the current conditions (32.3 points) only marginally superior to the expectations (29.2 points).
The current conditions are at a historic low level, while the analysts have shared similarly gloomy expectations over the past couple of years, only last November, when the presidential elections were annulled, in May before the repeated presidential elections, and in June before the ruling coalition agreed on the first package of reforms.
The analysts expect the national economy to advance by only 0.6% this year (from 0.8% in September) and do not believe the economic growth will exceed 1% in 2026. The forecast for 2025 is consistent with a 3.0% q/q economic contraction in Q4, which is most likely not the case yet, despite visible signs of weakening domestic consumption sentiment and more parsimonious public expenditure.
While CFA’s expectations for this year may be rather pessimistic, the magnitude of the fiscal stance next year (3.0% of GDP up from 1.7% of GDP this year) and the negative expectations in the private sector are supporting concerns about subdued economic expansion. However, the EUR 10 billion (2.5% of GDP) of Resilience Facility money, supposed to be absorbed over the past 12 months, should add a bit of optimism to the overall picture, as most of the funds are grants.
The European Commission, in its Autumn Forecast, published this month, agreed Romania’s next year’s economic growth would not exceed 1% by much (to hit 1.1%) after a subdued 0.7% economic advance in 2025. But this would come with a public deficit of 6.2% of GDP next year – a much better performance compared to the CFA analysts’ projection.
When it comes to the public budget execution, the CFA analysts expect the government to deliver on its repeatedly revised target and close this year with an 8.3% of GDP gap (8.6% in September). But the 7% of GDP deficit projected for 2026 indicates slight slippage from the 6%-6.5% target envisaged by the executive.
With not even the basic principles of the 2026 budget planning legislated (the Constitutional Court must clear some tax hikes and fiscal provisions on December 10), the expectations reflect rather the analysts’ scepticism backed by problematic past conduct in the area of budgetary policies.
The 6.25% inflation estimated by the CFA analysts over the next 12 months does not necessarily represent an improvement compared to the 7.18% in the last survey conducted in September, since the headline inflation is broadly expected to experience a sharp downward correction in August-December 2026 as the transitory effect of the VAT rate and electricity price hikes fades away.
iulian@romania-insider.com
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