The latest Romania assessment conducted by Allianz Trade, a global leader in trade credit insurance and country risk analysis, offers a broad picture of the country’s economic challenges expected for 2025. The analysis is based on an in-house risk rating model and highlights a number of structural imbalances – persistent inflation, weakening public and external finances, and political instability – that are shaping Romania’s risk profile. The country is rated B/3 (sensitive), reflecting a moderate risk of non-payment and high sensitivity to short-term economic shocks.
Modest economic growth and slow recovery in a volatile environment
Romania has outperformed many other emerging economies, achieving an average real GDP growth rate of +3.7% over the past two decades. However, this trend has been marked by episodes of high volatility, such as the -3.7% contraction in 2020, followed by a +5.7% rebound in 2021. The war in Ukraine has clouded the country’s growth outlook, primarily through higher energy costs and stronger inflationary pressures.
After a +4.1% expansion in 2022 and a slowdown to +2.1% in 2023, the economy grew by +1.4% in the first half of 2024, followed by a -0.3% contraction in Q3, bringing annual growth to just +0.8%. Allianz Trade analysts project a slow recovery in 2025, with a +1.0% GDP growth rate, followed by a more sustained pace of +2.3% in 2026. Economic momentum will depend largely on the level of public investment and the gradual rebound in domestic consumption, supported by rising real incomes. However, necessary fiscal consolidation measures will continue to weigh on the pace of growth.
Persistent inflation and cautious monetary easing
Although the National Bank of Romania has adopted an inflation-targeting regime of 2.5%, its monetary policy stance has remained accommodative for an extended period. Between 2017 and 2023, real interest rates stayed negative, even in the context of strong wage and consumer price growth.
In response to inflationary pressures triggered by rising energy prices, the National Bank gradually increased its policy rate from 1.25% in 2021 to 7% by January 2023. In July 2024, it initiated a new easing cycle, cutting the rate to 6.5%, with expectations of a further decline toward 5.5% by the end of 2025.
Despite the downward trend, inflation remains above the regional average, estimated at 5.6% in 2024 and projected at 4.8% for 2025 and 3.8% in 2026. This trend is driven by food price increases, strong wage growth, and expansionary fiscal policies.
Fiscal and external imbalances are growing
Romania’s public finances have deteriorated considerably, with the budget deficit rising from -4.3% of GDP in 2019 to -9.2% in 2020 due to crisis-related measures. Although the pandemic has passed, deficits remain high: above -6% in 2022 and 2023, and reaching -9.3% in 2024 – the highest in the EU. Under European commitments, Romania is required to bring its deficit below the -3% threshold by 2031. At the same time, public debt is on the rise: from 35% of GDP in 2019 to 49% in 2023, with projections exceeding 58% in 2026 and crossing the 60% threshold in 2027.
„The recently launched fiscal consolidation has a good chance of maintaining Romania’s investment-grade sovereign rating over the next 6–12 months. Budget deficit reduction was imperative, but the inflationary potential (fueled by rising energy prices as well as VAT and other taxes) and the negative impact on economic growth—which is now expected to slow significantly below the average of recent years—should not be overlooked.
At the microeconomic level, negative signals have become more frequent, with companies increasingly experiencing declines in profitability, at least at the net level (due to higher interest expenses and additional taxation) and more frequent liquidity challenges.
Ultimately, insufficient liquidity has manifested in mounting payment delays to suppliers, whose frequency has increased steadily over the past two years. The causes are many—ranging from weak profitability and dividend-driven decapitalization to extended collection terms to clients aimed at boosting sales or simply due to lack of available cash. Among all these, perhaps the most damaging is the extension of collection/payment terms, as it affects a large portion of cash flows and creates a domino effect throughout the economy. In sectors like pharmaceuticals and construction, volume receivables from state entities are often delayed by several days, further slowing down the cash flows of creditor companies and increasing insolvency risks,” says Mihai Chipirliu, CFA – Risk Director, Allianz Trade.
Romania’s current account deficit remains significant. Only about 30% of it is covered by foreign direct investment – well below the safe threshold of 75%. Allianz Trade analysts estimate the current account gap will remain at around -7.5% of GDP through 2026, increasing the country’s reliance on external financing and heightening its vulnerability to shifts in investor perception. Meanwhile, external debt, which fell to 47% of GDP in 2019, is climbing again—expected to reach 60% in 2025 and continue rising.
Relatively favorable business environment, but affected by political instability
Romania’s business environment is relatively favorable, but perceptions of political instability and corruption risks persist. According to the 2025 Heritage Foundation Index of Economic Freedom, Romania ranks 51st among more than 180 economies, with strong scores for property rights, tax burden, trade and investment freedom.
Meanwhile, Allianz Trade’s Environmental Sustainability Index ranks Romania 54th out of 210 economies, with good performance in energy use and CO₂ emissions per GDP, but weaknesses in recycling, renewable energy use and climate resilience.
Growing political polarization and instability
Systemic political risk remains moderate, and Romania benefits from strong international ties as an EU and NATO member and an OECD accession candidate. Nevertheless, political uncertainty has increased sharply, hindering fiscal reform prospects.
At the end of 2024, the Constitutional Court invalidated the presidential elections amid allegations of foreign interference. In May 2025, pro-European candidate Nicușor Dan won the new vote. However, the resulting parliament is highly fragmented, with a strong rise in anti-EU and far-right parties. This increased polarization severely limits the government’s ability to implement sustainable economic reforms, creating a volatile and uncertain political environment.