According to the EBRD, Romania’s economy growth rate slowed down significantly in 2023, to 2.1%, despite being one of the best advances recorded at a regional level. However, the decrease in private consumption, in the context of high inflation, was offset by the increase in investments and government spending.
After a weak 2023, industrial production began to recover, as automobile production increased by 7% year-over-year in the first quarter of 2024. In addition, for the first time after 2016, exports had a positive contribution to economic growth, as per EBRD estimates.
“The main vulnerability remains the fiscal position, given that the fiscal deficit has worsened to 5.9% of GDP in 2023 (in cash). Public spending is expected to advance further, in the context of an increase in public sector salaries and in pensions, supporting consumption but risking to generate an even bigger deficit in 2024,” the EBRD warns.
“Economic growth is expected to reach 3.2% in 2024 and 3.4% in 2025 as inflation moderates and financial conditions gradually ease. A painful fiscal consolidation from 2025 and possible market pressures are the main risks to economic growth in the medium term”, the report also reads.
Overall, the EBRD is currently less optimistic about the economic outlook for the approximately 40 countries in which it operates. According to the latest forecasts, the region where the EBRD operates is expected to see a 3% economic growth in 2024, above the 2.5% level recorded in 2023. However, this year’s growth would be 0.2 % lower than the one estimated in September 2023.