National Bank looks at risks for Romanian economy
The National Bank of Romania calls for political and governmental stability and for the fiscal correction to go ahead.
Ştefan Stoica, 24.08.2026, 14:00
The uncertainties generated by the country’s political situation pose a risk to the national currency’s exchange rate, the National Bank warned, according to the minutes of its monetary policy meeting on August 10 published at the end of last week. In the Bank’s view, other significant risks are posed by the ongoing conflict in the Middle East and, above all, by Romania’s persistently high budget deficit and trade deficit.
The National Bank expects the annual inflation rate to drop significantly in the third quarter of this year as the direct effects of the elimination of the cap on electricity and of an increase in the VAT and excise duties are waning. As a result, the inflation rate is expected to fall to 6.1% in December, down from 8.2% in July, and further drop to 3.4% by the end of next year. In the short term, however, the dynamics of the inflation rate will still be affected by the indirect impact of rising fuel and natural gas costs for businesses, as well as by increases in telecommunications tariffs and mandatory car insurance premiums.
The National Bank of Romania considers political and governmental stability, as well as the need to continue fiscal correction in line with the medium-term agreement concluded with the European Commission, as well as the benefits of attracting European funds through the National Recovery and Resilience Plan to be essential for the economy, including for public sector financing.
The central bank estimates a more modest recovery in economic activity in the second and third quarters of this year compared to previous forecasts, as the gap in demand is expected to narrow less than previously expected. Revised statistical data reconfirm the stagnation of economic activity in the first quarter of 2026, following a 1.9 percent contraction in the fourth quarter of 2025. The 1.2 percent economic decline in the first quarter of 2026 compared to the same period of the previous year is also reconfirmed, following a 0.2 percent growth in the fourth quarter of 2025. This decline was primarily driven by a significantly larger negative contribution from the change in inventories, compounded by a slight growth of the contraction in household consumption.
Regarding the labour market, the National Bank noted that new data suggest a near-halt in the trend of easing market conditions during the second quarter of 2026, indicating a slowdown in the decline of the total number of employees in the economy during April-May 2026 compared to the previous quarter. It was also observed that the annual growth rate of nominal gross wages continued to slow down in April and May, driven by the situation in the private sector, to reach historically low levels.
