Economic contraction in Romania
Romania's economy stagnated in the first quarter of the year compared to the last three months of 2025 and is down compared to the same period last year
Corina Cristea, 10.07.2026, 14:00
Romania’s economy continues to face difficult times, with data released Thursday by the National Institute of Statistics showing that it is stagnating compared to the last quarter of 2025 and experiencing an annual contraction. Compared to the same period last year, the country’s economy contracted by more than 1% in the first quarter; specifically, the Gross Domestic Product fell by 1.2% on a gross basis and by 1.1% on a seasonally adjusted basis. Industry and private consumption are dragging the economy down, while only a few sectors, such as construction, are managing to sustain economic activity.
Thus, the industrial sector, which accounts for one of the largest shares of the GDP, made a negative contribution of approximately 0.2 percentage points, a trend reflecting both weak external demand, particularly from European economies, and domestic issues related, among other things, to competitiveness and limited investment in technology. Trade, transportation, hotels, and restaurants also made a negative contribution to GDP growth, a situation reflecting a slowdown in household consumption amid high inflation and declining purchasing power.
Last but not least, the IT&C sector—one of the drivers of growth in recent years—also had a negative impact. The data show that investments made a positive contribution, but a smaller one than expected. Romania’s economy is in a sort of investment “ice age,” in which this form of stagflation—with a strong domestic flavor—has become a reality, according to economic consultant Adrian Negrescu, in a Facebook post, explaining that the situation stems from fiscal and administrative decisions made in recent years and that investments financed by European funds have prevented the economy from falling.
For his part, Adrian Codirlaşu, president of CFA Romania, says that the chances of recovering from the economic downturn by the end of the year are slim, and that European funds have essentially remained the main driver of growth
“In my opinion, it will be extremely difficult to make up for that 1.2% annual drop in the GDP this year. Therefore, I believe the baseline scenario is a recession. True, it will be a mild recession, but there will be a recession in Romania this year, and then we’ll see what happens next year. It depends on how well we can attract European funds. Those remain the sole driver of growth for the Romanian economy—not just this year, but I would say next year as well.”
This estimate comes as the National Bank of Romania (BNR) foresees only a slight recovery in economic activity in the second quarter. Data analysed by the Central Bank show that the decline in retail sales has slowed, construction has accelerated sharply, but industrial production continues to fall. In addition, the number of employees in the economy has fallen, and companies are reporting a decline in hiring intentions. In this context, attention is shifting toward European funds and the National Recovery and Resilience Plan. Both economists and the National Bank believe that European funds are essential for supporting investment and mitigating the effects of measures to reduce the budget deficit. (MI)
