We’re Trimming Our 2026 Romania Growth Forecast After a Bumpy End to 2025
•February 13, 2026
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Why It Matters
The weaker growth forecast signals tighter fiscal and monetary policy choices and raises doubts about Romania’s ability to meet EU‑fund targets without deeper stimulus. Investors and policymakers must reassess risk premiums as recession risks linger.
Key Takeaways
- •Q4 2025 GDP fell 1.9%, sharpest since 2012
- •Revised 2026 growth forecast cut to 0.6%
- •Private consumption and investment drive recession risk
- •EU funds expected to boost public investment in 2026
- •NBR likely to start rate cuts in May 2026
Pulse Analysis
Romania’s recent GDP revisions expose a fragile macro‑environment that extends beyond a single quarter. The 1.9% contraction in Q4 2025, coupled with a retroactive shift of Q1 2025 growth from +0.1% to –0.6%, confirms that private consumption has deteriorated sharply, likely reflecting stagnant real wages and reduced household confidence. Weak private investment compounds the downturn, while public spending—bolstered by record EU structural fund allocations—has so far cushioned the slide, preventing a deeper recession.
The fiscal outlook now hinges on how effectively the government can channel EU funds into productive projects. 2026 is projected to be a peak year for EU inflows, offering a potential catalyst for infrastructure and industrial capacity upgrades. However, the benefits of these projects will materialise gradually, with most impact expected in the latter half of 2026 and into 2027. In the short term, subdued consumption and negative real wages will keep demand muted, pressuring the authorities to balance fiscal consolidation with the need for stimulus.
Monetary policy is poised to respond to the emerging downside risks. The National Bank of Romania (NBR) is likely to initiate its first rate cut in May 2026, targeting a cumulative 100 basis‑point easing cycle. This pre‑emptive move aims to support borrowing and investment while containing inflationary pressures that could rise from the weaker output. Market participants should monitor NBR’s communications closely, as any deviation from the anticipated easing path could reshape the risk profile for both sovereign and corporate debt in the region.
We’re trimming our 2026 Romania growth forecast after a bumpy end to 2025
Article
The message from this flash GDP data release is clear: the economy ended 2025 in visible distress. GDP contracted by 1.9% in the fourth quarter compared to the third, its sharpest quarterly decline since 2012, excluding the pandemic. Additional revisions, especially to 1Q25 (from +0.1% to ‑0.6% quarterly growth), have further weakened the series. And, we now know from the latest data revisions that Romania managed to slip into a recession in the first part of 2024 as well.
While we don’t have the details yet, we can be reasonably confident that private consumption was the main culprit for the poor result, likely alongside weaker private investments. Public investments probably contributed positively and prevented a deeper downturn.
Under these conditions, our previous 2026 growth estimate of 1.4% now looks optimistic, even though it was already at the lower end of most estimates. Given the very weak 4Q25 reading, the carry‑over into 2026 is substantially negative. Assuming no further data revisions – a big assumption – the economy will have to work hard just to stay in positive territory. We therefore revise our 2026 forecast from 1.4% to 0.6% and await the detailed breakdown on 6 March.
Looking ahead, 2026 should be a record year for EU fund inflows, with strong public investment continuing to boost Romania’s productive capacity. Consumption is likely to remain subdued, as real wages are expected to stay negative for some time, weighing on demand at least for the first half of the year. But the peak of the investment cycle and the fiscal stimulus currently discussed should support activity later on – though much of the impact will likely appear later in 2026 and mostly in 2027.
Today’s weaker‑than‑expected GDP figure introduces clear downside risks to the inflation outlook and could encourage the National Bank of Romania to front‑load its easing cycle.
At the same time, the sharp economic slowdown may increase the pressure on the government to temper the pace of fiscal consolidation, given the scale of the setback. We continue to expect the NBR to deliver its first rate cut in May 2026, with a total of 100 bp of easing over the course of the year.
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