EBRD expects Romania's economy to shrink 0.2pct in 2026 and warns downside risks persist
The European Bank for Reconstruction and Development (EBRD) has kept the prospects concerning the evolution of Romania's economy in 2026 and 2027, in line with the June forecast, and warns that negative evolution risks persist, according to the 'Regional Economic Prospects,' report the international financial institution published on Thursday.
After a 0.7 per cent economic growth in 2025, EBRD expects Romania's economy to shrink 0.2 per cent in 2026 and then grow 1.8 per cent in 2027.
'After a steep decline in economic output in the last quarter of 2025, real GDP contracted by 0.8 per cent year on year in the first half of 2026, owing to a 4.6 per cent decline in manufacturing output, a contraction in services and falling retail sales. In contrast, construction expanded, boosted by EU-funded infrastructure projects. While external imbalances have started to moderate, Romania's current account deficit remains among the largest in the EU. HICP inflation picked up to 9.7 per cent in May 2026, then decelerated to 6.3 per cent in August 2026, but it remained at the highest level in the EU. The depreciation of the currency against the euro, coupled with higher energy prices, could prolong inflationary pressures,' the EBRD report reads.
After narrowing to 7.9 per cent of GDP in 2025, the general government deficit was 37 per cent lower in nominal terms in January-July than in the corresponding period in 2025, with the full-year deficit target of 6.2 per cent of GDP looking achievable, the EBRD forecasts.
'Assuming a gradual recovery in household demand and the finalisation of EU-funded investments, along with a mild recovery in exports linked to partially restored cost competitiveness, GDP growth could return in the second half of the year. The economy is expected to shrink by an average of 0.2 per cent in 2026 then grow by 1.8 per cent in 2027, notwithstanding a likely decline in public investment. Downside risks persist, linked to fiscal policy uncertainty, energy price shocks and weak foreign demand,' the aforementioned source points out. AGERPRES (RO - writing by: Mihaela Dicu; EN - writing by: Adina Panaitescu)
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