BNR: Romania's economy could enter negative territory, inflation remains above 6%

Cosmin Marinescu, Deputy Governor of the National Bank of Romania, has published an analysis on the BNR Opinions blog warning that the outlook for the Romanian economy this year remains cautious or even negative. According to him, following modest growth over the past two years – 0.9% in 2024 and 0.7% in 2025 – the economy could record negative growth this year, which would signal the onset of stagflation.

The NBR official notes that the decline in consumption signals a transition towards a new economic model, in which investment, rather than consumption and deficits, would become the primary driver of growth.

Inflation to remain above 6% by year-end

Although inflation fell over the summer from 10.4% in June to 6.2% in August – a reduction of nearly 4 percentage points, attributed to a base effect – forecasts indicate it will remain above 6% through to the end of the year. A return to the inflation target is not expected until the final quarter of 2027.

Marinescu stresses the need to continue fiscal consolidation into 2027, particularly given that public debt has already exceeded 60% of GDP and interest expenditure is approaching 3% of GDP.

Trade deficit has narrowed, but driven by falling consumption

The NBR Deputy Governor notes that the trade balance deficit has contracted, though far more slowly than anticipated. According to him, the adjustment is the result of reduced consumption rather than any significant increase in exports: "This adjustment is occurring primarily in response to reduced consumption, not as a result of notable export growth. In fact, it is a correction of domestic demand, not a competitiveness gain."

A new economic model, built on investment and productivity

Marinescu believes that Romania's current economic model, based on low costs and cheap labour, "has reached its limits," and that the country can no longer present itself to Western investors as a cost-competitive market. In his view, the future should lie in a qualitative growth model, centred on productivity, the expansion of local production chains, and investment in technology and human capital.

The analysis comes just under two days before the rating agency Standard & Poor's is due to announce the outcome of its review of Romania's sovereign credit rating. A potential downgrade to "junk" status would further complicate the economic recovery process, against an international backdrop already considered fragile.