Romania: Economic and Political Overview
Romania has made significant progress in economic performance and convergence with the European Union but faces challenges in promoting growth that is more inclusive and sustainable, both economically and environmentally. Following robust economic growth in 2022 (+4.7%) driven by private consumption and investments, Romania’s economic output grew by 2.4% in 2023. However, growth slowed to 0.9% in 2024, primarily driven by the final consumption expenditure of households, which contributed 3.6 percentage points (data INSEE). A gradual increase in external demand and exports, further easing of financial conditions, resilient private consumption, and an acceleration of private investment are expected to drive real GDP growth to 2.5% in 2025 and 2.9% in 2026. EU-funded investment in public infrastructure is set to provide strong support for growth (EU Commission).
According to preliminary estimates from the Finance Ministry, Romania's general government budget deficit reached over 8.6% of GDP in 2024, one of the highest in the EU and nearly 70% higher compared to 2023, as spending increased by 19.1% to EUR 146.2 billion. Budget revenues increased by 10.4% y/y to RON 574.6 billion, driven mainly by insurance contributions, VAT, excise duties, payroll and income taxes, profit tax, and non-tax revenues, including the impact of September’s tax amnesty. EU reimbursements and grants totaled RON 42.62 billion in 2024, down 37% y/y. Total spending was 41.22% of GDP, up by 3.16 percentage points from the previous year. Social assistance accounted for 30.8% of spending, while staff expenses and goods and services costs made up 22.6% and 12.9%, respectively. Investments reached RON 120.21 billion, up 19.4% y/y, with non-refundable external financing covering 38.4% of total investment expenditure. The deficit is expected to remain high in 2025 and 2026. In 2025, the short-term costs of pension reform and a further rise in interest payments (projected at 2.2% of GDP in 2026, up from 1.4% in 2022) are likely to keep government expenditure growth elevated. Revenue growth is expected to stay strong, in line with economic activity (EU Commission). General government debt is projected to rise from 55.7% of GDP in 2024 to 63.1% in 2026, driven by high deficits and slower nominal GDP growth in the coming years. The country recorded the highest inflation rate in the EU in 2024, at 5.5%, still much lower than the double-digit figure recorded the previous here. Average HICP inflation is expected to decelerate further and eventually fall within the central bank's inflation target range of 2.5% ±1 percentage point, but not until the end of 2026.
An ageing population, the emigration of skilled labour, significant tax evasion, and insufficient health care may compromise Romania’s long-term growth and economic stability and are the economy's top vulnerabilities. Despite a relatively low level of unemployment (at 5.6% in 2024), Romania remains one of the poorest countries in Europe, with 32% of the population at risk of poverty or social exclusion (the highest ratio in the EU - data by the EU Commission). Labour market pressures have eased due to slower economic activity and a growing inflow of foreign workers. However, labour demand remains strong, and the unemployment rate is expected to decrease slightly. Nominal wages in both sectors grew at a double-digit rate in 2024, but wage growth is expected to moderate in 2025 and 2026 due to high minimum wage increases, lower inflation, and reduced labour market tightness. Lastly, the IMF estimated the country’s GDP per capita (PPP) at USD 47,203 in 2024, still below the EU average.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 351.07 | 380.56 | 406.20 | 431.68 | 453.11 |
| GDP (Constant Prices, Annual % Change) | 2.1 | 1.9 | 3.3 | 3.7 | 3.7 |
| GDP per Capita (USD) | 18,425 | 20,089 | 21,570 | 23,066 | 24,369 |
| General Government Balance (in % of GDP) | -5.6 | -7.4 | -7.3 | -7.1 | -7.0 |
| General Government Gross Debt (in % of GDP) | 52.1 | 55.7 | 59.7 | 63.1 | 66.7 |
| Inflation Rate (%) | 10.4 | 5.3 | 3.6 | 3.3 | 3.0 |
| Unemployment Rate (% of the Labour Force) | 5.6 | 5.6 | 5.4 | 5.2 | 5.1 |
| Current Account (billions USD) | -24.49 | -28.53 | -28.45 | -28.73 | -28.43 |
| Current Account (in % of GDP) | -7.0 | -7.5 | -7.0 | -6.7 | -6.3 |
Source: IMF – World Economic Outlook Database, October 2021
Romania has a labour force of 8.28 million people out of its 19.06 million population, though this number has been decreasing over the last decade due to the massive migration of Romanian workers to Western European countries. Agriculture represents around 4.5% of Romania's GDP and employs 18% of the country's active population (World Bank, latest data available). The main resources and agricultural production in Romania are cereals, sugar beets, and potatoes. However, production remains very low compared to the country's potential capacity (more than one-third of the land is arable). About 25% of the country is covered by forests (especially around Transylvania), and the logging industry is developing very fast. Romania has limited energy dependence thanks to coal, oil, gas, and uranium reserves. According to data from Eurostat, Romania is the seventh-biggest agricultural producer in the European Union: in 2023, the country’s agricultural output reached EUR 16.6 billion, marking a 14% y-o-y increase. This was the second-largest rise in agricultural production value in the EU, representing 6% of the total EU agricultural output (data EU Commission).
The industrial sector contributes 26.7% of the country's GDP and employs one-third of the active population. Thanks to inexpensive labour, its industry is diversified and competitive. Historically, manufacturing companies and the industrial sector represent the backbone of Romania's economy. For this reason, foreign direct investors are involved in heavy industry (metallurgy, steel), the manufacturing of vehicle parts, building and construction, petroleum refining, and textiles. According to figures from the World Bank, the manufacturing sector alone contributes 13% of GDP. Data from the national statistical office show that, in 2024, Romania's industrial output decreased by 1.5% year-on-year, following a 3% contraction one year earlier. The utilities sector weighed down overall performance with a 4.7% decline, while core manufacturing output dropped by 1.1% y/y in 2024. Despite the negative trend, some industries showed positive results: food manufacturing (+6.7% y/y), chemistry (+8.7% y/y), oil refining (+7.7% y/y), paper manufacturing (+8.7% y/y), and the production of transport means other than automobiles (+12.4% y/y). Notably, despite a record number of automobiles produced, the sector's industrial output fell by 5.7% y/y.
Romania's economy is mainly centred on the services sector, which represents 60.7% of GDP and employs around 48.9% of the nation's workforce. Tourism, in particular, has been booming in recent years: the number of tourists visiting the country in 2024 rose 4.5% on the year, reaching 14.26 million (data INSEE). The technology sector has also seen consistent growth in recent years, due to the emergence of a highly qualified workforce whose cost is lower than the European average. Romania's ITC sector accounts for around 8% of GDP (Romanian Software Industry Association). The Romanian banking sector comprises 32 credit institutions: two banks with full or majority Romanian state-owned capital, four credit institutions with majority domestic, and private capital, 18 banks with majority foreign capital and eight branches of foreign banks. About 65.6% of the Romanian banking sector’s assets are held by institutions with foreign capital (European Banking Federation). The retail sector is also important, with sales increasing by 8.6% y-o-y in volume terms in 2024, driven by the double-digit (+14.8%) rise in non-food sales (INSEE).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 17.9 | 33.2 | 48.9 |
| Value Added (in % of GDP) | 3.9 | 26.7 | 60.7 |
| Value Added (Annual % Change) | 9.6 | 1.3 | 2.0 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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Source: Index of Economic Freedom, Heritage Foundation
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Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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