Romania: Economy stagnates in Q1 2026
GDP flat in Q1, following two straight contractions: Romania’s GDP flatlined on a seasonally adjusted quarter-on-quarter basis in Q1, following a 1.9% contraction in the previous quarter.
In annual terms, the economy shrank 1.5% in Q1, unchanged from the previous quarter’s reading.
Private spending contracts: Relative to the previous quarter’s data, figures in Q1 improved for government consumption (+3.9% in seasonally adjusted quarter-on-quarter terms vs -6.6% in Q4), fixed investment (+1.4% vs +0.6% in Q4), exports of goods and services (0.0% vs -0.2% in Q4) and imports of goods and services (+1.0% vs -1.9% in Q4). In contrast, the reading for private consumption softened in Q1 (-1.8% vs -1.1% in Q4).
Private consumption was the main drag on the economy, weighed down by elevated inflation, deteriorating consumer sentiment, high borrowing costs and slowing real wage growth.
GDP growth to pick up ahead: Our Consensus is for sequential GDP growth to hit an over three-year high in Q2, aided in part by a low-base effect, following three straight quarters of little-to-no growth. EU funding and improving external demand from Western Europe should provide support to economic activity. Still, private consumption will likely remain subdued in the near term, dragged down by elevated borrowing costs, weak consumer confidence—which hit a 14-year low in April—and high inflation; the Iran energy shock will push imported inflation higher. Risks remain tilted to the downside: Political deadlock could delay the EU’s Recovery and Resilience Facility disbursements and weigh on investment.
Looking at 2026 as a whole, GDP growth is seen grinding to a near halt, clocking a six-year low.
Panelist insight: On the 2026 GDP growth outlook, EIU analysts said:
“We currently expect a recovery from the third quarter of 2026, when private consumption should rebound as inflation eases. Inflows of funds from the EU’s Recovery and Resilience Facility (RRF) should lift public investment and provide a stimulus to other parts of the economy in the second half of 2026. Improving growth prospects in western Europe (particularly Germany)—uncertainty about the length of the war in Iran notwithstanding—will also be supportive of growth later in the year.”