No journalist can do that alone when presenting any country’s economic outlook for the coming year. This is why we present what financial analysts and institutions predict about Romania’s economic outlook for 2024.
This will enable our readers to draw conclusions and prepare for the coming year. Either way, entrepreneurs have long learned their lessons when doing business in Romania: expect the unexpected, and despite any prediction or outlook, there is always the unpredictable factor named ‘politicians.’ One never knows when the Fiscal Code will be changed in the middle of the year, what additional taxes will be imposed from the very next day, and what else the government might conceive to support the enormous state payroll with more than 1.3 million state employees.
Thus, let’s look at what financial analysts and institutions predict about Romania’s economy in 2024.
The Pessimistic Outlook for 2024 Regarding Romania’s Economic Evolution
One of the most pessimistic outlooks belongs to reputable financial analyst Radu Georgescu, the managing partner at CFO Network. He talks about a 99,99% probability of recession in Romania in 2024 and blames this on the Government, which increased profit taxes three times for entrepreneurs.
Approximately 300,000 SRLs will pay three times higher income tax in 2024 because the tax increased from 1% to 3% starting January 1, 2024. Indirectly, we will all pay more taxes because the taxes at banks and companies with turnovers of over 50 million euros have increased. These companies will include the new taxes in their prices. The probability of a recession in 2024 is 99.99%Financial analyst Radu Georgescu on Romania’s Economic Outlook in 2024
With these tax increases, the state wants to take EUR 4 billion per year from the private sector, a tremendous amount for the Romanian economy.
During the last financial crisis, in 2010, the increase in taxes took only 5 billion lei from the private sector. This means that starting from January 1, 2024, people will have less money for consumption.
This is one of the most pessimistic outlooks for 2024 regarding Romania’s economy, but Radu Georgescu is a reputable financial analyst with a solid background and experience.
Apart from that, we must consider that in 2024, there will be organized local, general, presidential and euro-parliamentary elections, which means the Government will pressure entrepreneurs to pay more taxes to save the day for the general public. The hunger games for more votes from public servants will make the authorities do whatever is necessary to make the entrepreneurs pay even more.
Do you think this is the worst-case scenario? Not even close! For the worst-case scenario, we should look at what happened in Greece in 2010, when the country had the most significant deficit in the EU, precisely where Romania currently stands. And, like in Romania, the Greeks preferred their way of handling things instead of cutting off public jobs, leading to the economy’s default. Exactly what the Romanian Government does. For the sake of our readers, we won’t depict the whole scenario, but anybody can check what happened in Greece after 2010 and draw their conclusions.
The Optimistic Outlook for 2024 Regarding Romania’s Economic Evolution
There aren’t only pessimistic outlooks regarding how Romania’s economy will behave in 2024. Forecasts for Romania’s economic growth are between 2.5% and 3.4%, the Romanian Government being the most optimistic of them all. Apart from Radu Georgescu, who mentioned a 99,99% chance of recession, no other forecast indicates a recession for Romania’s economy in 2024. Even so, all analysts say it could be less growth than between 2.5% and 3.4%.
Romania’s economy should accelerate in 2024, according to the forecasts of international institutions and local financial analysts. The most optimistic updated forecast of the Romanian government, through the National Strategy and Forecast Commission (CNSP), says that Romania’s GDP will grow at a rate of 3.4% in 2023. The European Commission hopes for a 3.1% growth of the GDP in Romania in 2024, while this steady pace will increase even more in 2025, when the European experts expect a 3.5% growth. On the other hand, the IMF says their experts project a 2.3% growth for Romania in 2024, but we must mention that all the above analyses and projections were made in October – November 2023.
However, the rest of the financial analysts who predict there would be growth do not give a percentage greater than 3%, but I am not saying that the economy will go into recession.
So, what will Romania’s economy look like in 2024? Most experts say it would accelerate, but, like Georgescu, others doubt the acceleration and predicted growth. Moreover, with all the measures the Government took against the entrepreneurs, who now have to pay more taxes, sometimes three times more than in 2023, the expected economic growth could take a nasty turn right in the most crucial election year so far for the country.