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Economic and political overview

Economic Overview

Romania has made significant progress in economic performance and convergence with the European Union but faces challenges in promoting growth that is more inclusive and sustainable, both economically and environmentally. Following robust economic growth in 2022 (+4.7%) driven by private consumption and investments, Romania’s economic output grew by 2.4% in 2023. However, growth slowed to 0.9% in 2024, primarily driven by the final consumption expenditure of households, which contributed 3.6 percentage points (data INSEE). A gradual increase in external demand and exports, further easing of financial conditions, resilient private consumption, and an acceleration of private investment are expected to drive real GDP growth to 2.5% in 2025 and 2.9% in 2026. EU-funded investment in public infrastructure is set to provide strong support for growth (EU Commission).

According to preliminary estimates from the Finance Ministry, Romania's general government budget deficit reached over 8.6% of GDP in 2024, one of the highest in the EU and nearly 70% higher compared to 2023, as spending increased by 19.1% to EUR 146.2 billion. Budget revenues increased by 10.4% y/y to RON 574.6 billion, driven mainly by insurance contributions, VAT, excise duties, payroll and income taxes, profit tax, and non-tax revenues, including the impact of September’s tax amnesty. EU reimbursements and grants totaled RON 42.62 billion in 2024, down 37% y/y. Total spending was 41.22% of GDP, up by 3.16 percentage points from the previous year. Social assistance accounted for 30.8% of spending, while staff expenses and goods and services costs made up 22.6% and 12.9%, respectively. Investments reached RON 120.21 billion, up 19.4% y/y, with non-refundable external financing covering 38.4% of total investment expenditure. The deficit is expected to remain high in 2025 and 2026. In 2025, the short-term costs of pension reform and a further rise in interest payments (projected at 2.2% of GDP in 2026, up from 1.4% in 2022) are likely to keep government expenditure growth elevated. Revenue growth is expected to stay strong, in line with economic activity (EU Commission). General government debt is projected to rise from 55.7% of GDP in 2024 to 63.1% in 2026, driven by high deficits and slower nominal GDP growth in the coming years. The country recorded the highest inflation rate in the EU in 2024, at 5.5%, still much lower than the double-digit figure recorded the previous here. Average HICP inflation is expected to decelerate further and eventually fall within the central bank's inflation target range of 2.5% ±1 percentage point, but not until the end of 2026.

An ageing population, the emigration of skilled labour, significant tax evasion, and insufficient health care may compromise Romania’s long-term growth and economic stability and are the economy's top vulnerabilities. Despite a relatively low level of unemployment (at 5.6% in 2024), Romania remains one of the poorest countries in Europe, with 32% of the population at risk of poverty or social exclusion (the highest ratio in the EU - data by the EU Commission). Labour market pressures have eased due to slower economic activity and a growing inflow of foreign workers. However, labour demand remains strong, and the unemployment rate is expected to decrease slightly. Nominal wages in both sectors grew at a double-digit rate in 2024, but wage growth is expected to moderate in 2025 and 2026 due to high minimum wage increases, lower inflation, and reduced labour market tightness. Lastly, the IMF estimated the country’s GDP per capita (PPP) at USD 47,203 in 2024, still below the EU average.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 351.07380.56406.20431.68453.11
GDP (Constant Prices, Annual % Change) 2.11.93.33.73.7
GDP per Capita (USD) 18,42520,08921,57023,06624,369
General Government Balance (in % of GDP) -5.6-7.4-7.3-7.1-7.0
General Government Gross Debt (in % of GDP) 52.155.759.763.166.7
Inflation Rate (%) 10.45.33.63.33.0
Unemployment Rate (% of the Labour Force) 5.65.65.45.25.1
Current Account (billions USD) -24.49-28.53-28.45-28.73-28.43
Current Account (in % of GDP) -7.0-7.5-7.0-6.7-6.3

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Romania has a labour force of 8.28 million people out of its 19.06 million population, though this number has been decreasing over the last decade due to the massive migration of Romanian workers to Western European countries. Agriculture represents around 4.5% of Romania's GDP and employs 18% of the country's active population (World Bank, latest data available). The main resources and agricultural production in Romania are cereals, sugar beets, and potatoes. However, production remains very low compared to the country's potential capacity (more than one-third of the land is arable). About 25% of the country is covered by forests (especially around Transylvania), and the logging industry is developing very fast. Romania has limited energy dependence thanks to coal, oil, gas, and uranium reserves. According to data from Eurostat, Romania is the seventh-biggest agricultural producer in the European Union: in 2023, the country’s agricultural output reached EUR 16.6 billion, marking a 14% y-o-y increase. This was the second-largest rise in agricultural production value in the EU, representing 6% of the total EU agricultural output (data EU Commission).

The industrial sector contributes 26.7% of the country's GDP and employs one-third of the active population. Thanks to inexpensive labour, its industry is diversified and competitive. Historically, manufacturing companies and the industrial sector represent the backbone of Romania's economy. For this reason, foreign direct investors are involved in heavy industry (metallurgy, steel), the manufacturing of vehicle parts, building and construction, petroleum refining, and textiles. According to figures from the World Bank, the manufacturing sector alone contributes 13% of GDP. Data from the national statistical office show that, in 2024, Romania's industrial output decreased by 1.5% year-on-year, following a 3% contraction one year earlier. The utilities sector weighed down overall performance with a 4.7% decline, while core manufacturing output dropped by 1.1% y/y in 2024. Despite the negative trend, some industries showed positive results: food manufacturing (+6.7% y/y), chemistry (+8.7% y/y), oil refining (+7.7% y/y), paper manufacturing (+8.7% y/y), and the production of transport means other than automobiles (+12.4% y/y). Notably, despite a record number of automobiles produced, the sector's industrial output fell by 5.7% y/y.

Romania's economy is mainly centred on the services sector, which represents 60.7% of GDP and employs around 48.9% of the nation's workforce. Tourism, in particular, has been booming in recent years: the number of tourists visiting the country in 2024 rose 4.5% on the year, reaching 14.26 million (data INSEE). The technology sector has also seen consistent growth in recent years, due to the emergence of a highly qualified workforce whose cost is lower than the European average. Romania's ITC sector accounts for around 8% of GDP (Romanian Software Industry Association). The Romanian banking sector comprises 32 credit institutions: two banks with full or majority Romanian state-owned capital, four credit institutions with majority domestic, and private capital, 18 banks with majority foreign capital and eight branches of foreign banks. About 65.6% of the Romanian banking sector’s assets are held by institutions with foreign capital (European Banking Federation). The retail sector is also important, with sales increasing by 8.6% y-o-y in volume terms in 2024, driven by the double-digit (+14.8%) rise in non-food sales (INSEE).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 17.9 33.2 48.9
Value Added (in % of GDP) 3.9 26.7 60.7
Value Added (Annual % Change) 9.6 1.3 2.0

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Romanian New Leu (RON) - Average Annual Exchange Rate For 1 USD 4.064.053.944.204.24

Source: World Bank - Latest available data.

 

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Foreign Trade

Romania is open to foreign trade, which represents 83% of its GDP (World Bank, latest data available). The country mainly exports machinery and transport equipment (44.8% of total exports in 2023, mostly cars), manufactured goods classified mainly by raw materials (15.9%), miscellaneous manufactured articles (13.9%), and food and live animals (8.2%). Imports are led by machinery (36.8%); mineral products; chemical products; and base metals (data INSEE 2023).

The European Union is the main trading partner, accounting for 72.6% of total exports and 73.3% of imports in 2023. The leading countries for exports are Germany (20.8%), Italy (10.2%), France (6.3%), Hungary (5.7%), and Bulgaria (4.2%); whereas imports are led by Germany (19.4%), Italy (8.7%), Hungary (6.5%), Poland (6.2%), and China (5.5% - data Comtrade).

Romania’s foreign trade figures for 2023 published by WTO show that merchandise exports amounted to USD 100.6 billion (+4% year-on-year), while imports decreased to USD 131.9 billion (-0.4%). On the other hand, the country is a net exporter of commercial services, with exports totalling USD 42.8 billion against USD 28.4 billion in imports (+10.4% and +13.4%, respectively). Overall, Romania has a structurally negative trade balance: in 2023, it stood at around 4.8% of the country’s GDP (from 6.9% one year earlier - World Bank). According to preliminary figures from the national statistical office INSEE, in 2024, Romania's trade deficit expanded by 15.3% in 2024, reaching EUR 33.39 billion (USD 34.4 billion). FOB exports slipped by 0.4% to EUR 92.69 billion, while CIF imports rose by 3.3% to EUR 126.08 billion. Machinery and transport equipment dominated trade, representing 47% of exports and 36.4% of imports, with other manufactured goods accounting for 28.5% of exports and 28.6% of imports.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 96,54492,132116,203132,468131,912
Exports of Goods (million USD) 76,87170,71887,38896,699100,612
Imports of Services (million USD) 20,61416,36421,80025,06728,440
Exports of Services (million USD) 30,30227,16532,91438,75842,797

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 84.477.986.693.683.1
Trade Balance (million USD) -19,960-21,676-27,291-33,614-31,328
Trade Balance (Including Service) (million USD) -10,282-10,875-16,177-19,923-16,940
Imports of Goods and Services (Annual % Change) 8.8-5.214.69.3-1.1
Exports of Goods and Services (Annual % Change) 5.4-9.512.69.3-0.8
Imports of Goods and Services (in % of GDP) 44.341.246.150.343.9
Exports of Goods and Services (in % of GDP) 40.136.840.543.439.2

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) -2.75.05.75.35.4
Volume of imports of goods and services (Annual % change) 2.55.15.84.84.6

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Member of the European Union
Member of the European Economic Area which has guaranteed, since 1 January 1993, the free movement of most goods between European countries.
Multilateral agreements and bilateral agreements with many countries.

Member of the ASEM (Asia-Europe Meeting).

 

Main Partner Countries

Main Customers
(% of Exports)		 2023
Germany 20.8%
Italy 10.2%
France 6.3%
Hungary 5.7%
Bulgaria 4.2%
See More Countries 52.8%
Main Suppliers
(% of Imports)		 2023
Germany 19.4%
Italy 8.7%
Hungary 6.5%
Poland 6.2%
China 5.5%
See More Countries 53.7%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Klaus Werner IOHANNIS (since 21 December 2014)
Prime Minister: Marcel CIOLACU (since 15 June 2023)
Next Election Dates
Presidential: 4 and 18 May 2025
Chamber of Deputies and Senate: November 2028
Main Political Parties
The main political parties in the country are:

- Social Democratic Party (PSD): centre-left, focused on social welfare, economic equality, and progressive policies
- National Liberal Party (PNL): centre-right, conservative, pro-European party advocating for market reforms and national development
- Democratic Alliance of Hungarians (UDMR): supports minority Hungarian interests, liberal conservatism
- Alliance for the Unity of Romanians (AUR): right-wing, conservative, nationalist
- Save Romania Union (USR): syncretic, liberal
- Party of Young People (POT): right-wing to far-right
- S.O.S. Romania (SOS Ro): right-wing populist, socially conservative, and irredentist.
Executive Power
The President is the Head of State and is elected by universal suffrage for a term of five years, renewable once. The President is also the Commander-in-Chief of the army and is responsible for protecting the Constitution. Under the Romanian Constitution, the President acts as a mediator between the various centers of power in the country. The Prime Minister is appointed by the President — usually the leader of the majority party or coalition — and serves for a term of four years, aligned with the parliamentary cycle. The Prime Minister is the Head of Government and holds executive power, including law enforcement and management of the country's affairs. The Council of Ministers is appointed by the Prime Minister and must be approved by Parliament.
Legislative Power
The legislature in Romania is bicameral. The Parliament consists of the Senate (the upper house) with 136 seats and the Chamber of Deputies (the lower house) with 330 seats, though the number of seats may vary based on population changes and electoral laws. The members of both houses are elected by direct, popular vote on a proportional representation basis to serve four-year terms. The executive branch of the Government is directly or indirectly dependent on the support of the Parliament, often expressed through a vote of confidence. The Prime Minister does not have the power to dissolve the Parliament directly, but the President can do so after consultation with the political parties represented in the two houses. The people of Romania have considerable political rights, including participation in free elections, political party membership, and political expression
 

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