Economic growth has been strong over the last three years, gradually broadening its base. In the wake of the 2009 crisis the Romanian economy stabilised with the support of EU-IMF financial assistance programmes. It has been expanding strongly since 2013, the drivers of growth switching gradually from net exports to domestic demand. Private consumption recovered to its post-2008 peak on the back of higher household disposable income boosted by strong wage growth and negative inflation. Investment was slower to recover but has returned to near pre-crisis growth rates. Conversely, imports are being fostered by robust domestic demand, but the current account deficit expanded only marginally last year as export market shares continued to grow, especially in the services sector. Fiscal stimuli are expected to boost real GDP growth above potential in 2016-2017. These measures combined with accelerating wage growth will add further pressure on already robust domestic demand. At the same time, policy measures on the supply side of the economy, such as investment in innovation and infrastructure or improvements to the business environment and public administration, remain limited. The main challenge will be to ensure balanced and durable growth in the future.
Romania is experiencing no macroeconomic imbalances. Risks are linked to the high stock of net foreign liabilities, vulnerabilities of the banking sector and pro-cyclical fiscal policy along with strong wage growth. In a context of strengthened recovery, net external liabilities have declined from a high level. With the support of the Commission, action has been taken to strengthen the financial sector. The banking sector is now well capitalised and liquid but several currently discussed legislative initiatives pose a risk for its stability. Public wages and the minimum wage were increased and tax cuts were implemented. This poses a risk of fiscal policy becoming pro-cyclical.
Read a complete analysis of Romania's economy in the country report 2016 [2 MB]
2015 recommendations in brief
The Commission has made four country-specific recommendations to Romania to help it improve its economic performance. These are in the areas of: implementation of the programme; public finances, taxation and pensions; labour market, wage-setting, education and health; state-owned enterprises.