The National Commission for Strategy and Prognosis (CNSP) estimates an economic contraction of 0.4% for 2026, compared to the 0.1% growth anticipated in the previous forecast, which is a downward revision of 0.5 percentage points.

As for the nominal value of the GDP, it has been revised upward to 2,086.3 billion lei, compared to 2,056 billion lei in the spring forecast and 1,916 billion lei for 2025, according to the Medium-Term Forecast 2026-2029, updated for the budget rectification.

'An important factor shaping the current scenario is the intensification of geopolitical tensions in the Middle East, which has triggered a new shock in international energy markets, affecting fuel prices as well as production and transport costs. For the Romanian economy, these pressures have compounded the effects of fiscal consolidation measures and persistently high inflation, contributing to a decline in household purchasing power and prolonging the adjustment period for private consumption. At the same time, rising domestic supply-side costs, against a backdrop of modest demand, have impaired the competitiveness of certain industrial sectors and hindered their ability to return to previous production levels,' the document published by the CNSP says.

According to provisional data (2) released by the National Institute of Statistics, Gross Domestic Product (GDP) fell by 0.6% in real terms during the first half of 2026, a trend that reflects the persistence of economic difficulties, driven by a contraction in industrial activity and certain service sectors.

'On an annual basis, the positive contribution from certain high-performing sectors, primarily construction and agriculture, alongside trends in domestic demand indicators (which benefit from a favorable base effect in the second half of the year), has led to a projected slight economic contraction of 0.4%. Furthermore, the upward revision of the nominal GDP to 2,086.3 billion lei reflects both an update to the 2025 baseline, based on the latest data from the National Institute of Statistics (INS), and an adjustment to the GDP deflator estimate, from 7.2% to 8.5%, amid persistent price pressures within the economy,' the CNSP states.

On the supply side, the most significant revision concerns the industrial sector, for which a sharper decline in gross value added, by 3.4%, is now projected. This adjustment accounts for both the performance recorded in the first part of the year and the outlook for continued modest domestic demand, as high energy and intermediate input costs continue to weigh on activity in certain industrial branches.

Although exports of goods showed positive nominal growth, this did not translate into a broad-based recovery in industrial production; this is due to divergent trends across export-oriented sectors, the specific composition of traded goods, and the impact of price fluctuations.

'The current scenario anticipates an economic revival, supported by a easing of inflationary pressures and a gradual recovery in domestic demand. The projected Gross Domestic Product growth reflects both the deterioration of economic performance in 2026 and the prospect of a slower recovery in consumption and economic activity,' according to the CNSP.

Growth is expected to continue in the coming years, reaching 2.4% in 2028 and 2.1% in 2029.

As to inflation, the disinflationary process that began in the second half of 2026 is expected to continue throughout 2027. Consequently, the inflation rate by the end of 2027 is estimated at 3.4%, with an annual average of 4.6%. According to the CNSP, the inflation rate will reach 3.0% in 2028 (with an annual average of 3.3%) and 2.8% in 2029 (with an annual average of 3.0%).

For 2027, the forecast accounts for a reduction in inflationary pressures stemming from energy prices, based on the assumption that international energy prices will stabilize and no new shocks will occur.

Furthermore, the projections factor in a moderate depreciation of the national currency, as well as favorable climatic conditions that are not expected to negatively impact the prices of agri-food products. The CNSP estimates an average exchange rate of 5.38 lei/euro for 2027; for 2028, it is forecast to reach 5.49 lei/euro, and for 2029, 5.60 lei/euro. AGERPRES(RO - writing by: Mariana Nica; EN - writing by: Bogdan Gabaroi)