Romania to register modest GDP growth in 2025, says ING

Business Forum
Romania's GDP is projected to expand modestly from 0.9% in 2024 to 1.2% in 2025, though significant downside risks, including geopolitical tensions, cloud this outlook, finds new research by ING Romania economists.

Q1 2025 saw near stagnation, with strong consumption and elevated imports dominating, while investment remained flat. Exports have been weak, contributing to a 26.9% year-on-year widening of the trade deficit in Q1. 

“More broadly, despite the recent uncertainty stemming from a prolonged electoral cycle and delayed fiscal adjustments, we believe the public investment momentum built over the past three years will begin to translate into stronger productivity gains. As Romania's consumption-driven growth model shows its limits, only sustained investment in productive capacity can restore healthy GDP growth and help narrow the structural trade deficit,” according to the analysis published by ING economists Valentin Tătaru and Ștefan Posea.

The budget deficit is a key concern, with projections now placing it at 7.5% of GDP in 2025. This comes after a challenging start to the year, with the deficit reaching 2.95% of GDP by April. 

While cost-cutting measures are a central focus in political negotiations, increased taxation or reduced investment may be considered for quicker fiscal consolidation, potentially adding to uncertainties for growth and inflation. 

Inflation is expected to end 2025 at 5.0% and average 5.2% throughout the year, with upside risks. The National Bank of Romania (NBR) has maintained its policy rate through the first four meetings of 2025. 

While a 50 basis point rate cut between October and November remains the base case from 6.50%, the risk of delays into 2026 is significant due to persistent wage growth, the high fiscal deficit, and political uncertainties that triggered notable capital outflows earlier this year.

Furthermore, potential increases in the tax burden, such as a VAT hike, pose a key risk to the inflation outlook.

RECOMMENDED
Romanias inflation remains steady in April 2025
Economy

Romania's inflation remains steady in April 2025

Romania's Consumer Price Index (CPI) increased marginally by 0.07% compared to March 2025, while the annual inflation rate reached 4.9% by April 2025, according to the National Institute of Statistics (INS).

RECOMMENDED FROM THE HOME PAGE
Romanias net profit of banking system up 5% in 2024
Finance

Romania's net profit of banking system up 5% in 2024

The net profit of the entire banking system amounted to RON 14.197 billion (€2.86 billion) at the end of 2024, up 5% compared to 2023, according to the annual report for 2024 published on Monday by the National Bank of Romania.

READ MORE
Business Forum  |  23 June, 2025 at 6:23 PM
Business Forum  |  23 June, 2025 at 4:26 PM