While Romania has made significant strides in economic development and integration with the EU, it faces challenges in achieving more inclusive and sustainable growth. Key obstacles include regional disparities, weaknesses in institutions, shortages of skilled labor, a declining working-age population, and vulnerabilities to natural hazards and climate change. Pro-cyclical fiscal measures have increased consumption, resulting in consistently high twin deficits. The main short-term challenge for Romania is to balance fiscal pressures and trade deficits while addressing ongoing issues related to social inclusion.
In 2024, Romania’s economic growth slowed to 0.9%, hindering poverty reduction efforts and reflecting weak private investment and a worsening trade deficit. Global economic uncertainty is predicted to further impact growth and poverty reduction in 2025 and over the medium term. The pressures from fiscal and current account deficits are expected to remain elevated.
