World Bank revises downward Romania’s outlook

Romania’s economic growth rate will slow down in 2025, according to the World Bank.

Ştefan Stoica, 20.01.2025, 13:50

Romania’s economic growth rate will slow down in 2025, according to the World Bank.

The Romanian economy will register an advance of only 2.1% this year, compared to a level of 3.8% estimated in the middle of last year, according to the World Bank’s “Global Economic Prospects” report , made public recently. The institution’s forecast for next year is also revised downwards, from 3.8% to 2.6%. According to the World Bank, growth in Central Europe is forecast to rebound to 2.8% in 2025 and 3% in 2026, driven by robust private demand.  However, export  from Central Europe is expected to remain modest due to subdued growth in the euro area.

Investment, particularly in Poland and Romania, is projected to gain traction from structural reforms and delayed EU funding, experts of the international institution say. These countries have disbursed 19% and 33%, respectively, of their Recovery and Resilience Facility allocations, with approximately 13% of milestones achieved and positively assessed, the report shows. Despite the inflow EU funding, recently announced fiscal consolidation measures have contributed to notable downward revisions to Romania’s outlook since June.

At the beginning of February, an IMF mission will travel to Bucharest, for meetings with representatives of the new Romanian Government and the National Bank. The visit aims to analyze recent economic and financial developments and update the macroeconomic outlook. At the end of last year, Fitch rating agency revised downwards its outlook for Romania’s GDP growth for 2025 and 2026, to 1.4% and 2.2% respectively, given a less pronounced recovery in the euro area. In fact, the World Bank forecasts that, in the euro area, GDP would grow by only 1% in 2025, after estimating an advance of 1.4% in June.

The worsening prospects come against the backdrop of reduced consumption, low corporate investments and weak industrial development. The World Bank draws attention to the effects that the problems facing Germany, which is responsible for almost 30% of the euro area’s GDP, may have. In addition, the World Bank warned that potential additional 10% tariffs by the United States could decrease the already fragile global economic growth by 0.3% if the US trading partners impose their own tariffs. The potential additional tariffs would shrink US economic growth by 0.9%, estimated at 2.3% in 2025. Foreign direct investment in developing countries is now half their level in 2000, and global trade restrictions are five times higher than the average in 2010-2019, the World Bank reports.