ING Bank analysts have revised Romania’s GDP growth forecast for 2024 to 1.0% from a previous estimate of 1.3%, citing persistent weak growth and rising risks tied to the country’s electoral context.\u00a0<\/p>\n
However, growth is expected to accelerate to 2.6% in 2025, supported by EU-funded investments, wage increases, and Romania’s anticipated Schengen accession.<\/p>\n
Romania’s economic performance has been sluggish, with GDP growth of just 0.9% year-to-date (YTD) in 2023 and third-quarter growth at 1.1%, below expectations.\u00a0<\/p>\n
Public spending surged in the lead-up to elections, but manufacturing, services, and agriculture remain underperforming sectors. Weak domestic production capacity and strong imports also weigh on the growth potential.<\/p>\n
ING Bank Romania chief economist Valentin T\u0103taru highlighted that civil engineering activities, linked to infrastructure investments, outperformed other sectors, signaling some positive momentum. Nevertheless, the IT sector, a key economic driver, has struggled, and drought conditions have exacerbated food inflation pressures.<\/p>\n
ING projects inflation at 5.0% in 2024, easing to 4.4% in 2025. However, risks remain tilted to the upside, fuelled by fiscal reforms and external volatility. The National Bank of Romania (BNR) is expected to adopt a cautious approach, with no additional rate cuts until the second quarter of 2025 at the earliest. ING forecasts a 75 basis-point reduction in 2025, bringing the key rate to 5.75%.<\/p>\n
Several factors are expected to support economic acceleration in 2025, including base effects, (moderate) real wage gains, and large-scale, EU-funded infrastructure projects, particularly in transport.<\/p>\n
Schengen accession is expected to boost trade and business productivity starting in January 2025.<\/p>\n
Pension indexation scheduled for early 2025 will further bolster private consumption.<\/p>\n
Despite these positives, Romania’s structural reliance on imports and European economic weakness remain significant challenges.<\/p>\n
Romania’s budget deficit is projected to remain high, at 8.0% of GDP in 2024 and 7.0% in 2025. While fiscal reform is necessary to regain market credibility, it poses short-term risks to growth and inflation. T\u0103taru cautioned that delayed reforms could lead to suboptimal tax measures, exacerbating economic challenges.<\/p>\n
Despite these risks, the economist expects long-delayed infrastructure projects to yield productivity gains, potentially boosting business confidence and investment. Romania’s strategic location for nearshoring and friendshoring could also offer opportunities in a reshaped global economic landscape.<\/p>\n
While fiscal pressures and political uncertainty weigh heavily on the short-term outlook, Romania’s longer-term potential lies in its ability to capitalize on EU-backed infrastructure modernization and anticipated gains from Schengen integration. However, effective fiscal management and structural reforms will be critical in unlocking this potential while maintaining market access and investor confidence.<\/p>\n