The OECD is expecting Romania’s GDP to grow by 3.1% in 2024 and 3.3% in 2025, up from 2.0% in 2023. High levels of investment will support the economy together with recovering external demand, while cost pressures on households gradually ease. Inflation has fallen from its peak of 16.8% in November 2022 during the energy crisis to 7.4% in January 2024, but underlying price pressures in the economy remain strong. Headline inflation is projected to continue declining to 5.0% in 2024 and 3.7% in 2025, according to Business-Review.eu.
Strengthening government finances through higher tax revenues and improvements to the efficiency of public spending is needed to keep public debt at manageable levels and to create space for growing spending pressures, such as from population ageing and the green transition. Fiscal consolidation is needed to decrease the budget deficit while it would also contribute to support restrictive monetary policy by reducing demand pressures at a time of high inflation.
Reinforcing public governance and the rule of law will be important to improve the business climate and foster productivity. While reforms are gradually reducing firms’ regulatory burdens, corruption and policy uncertainty create challenges for many businesses. A well-resourced Anti-Corruption Directorate remains essential, and the Survey recommends full implementation of reinforced governance arrangements for state-owned businesses and addressing barriers to finance for small firms.
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