Romania stands on the brink of a recession, warned Mugur Isarescu, Governor of the National Bank of Romania (BNR), outlining a precarious economic situation marked by rising inflation and slowing growth. Although the country has not officially entered a recession, the risk is significant, and the central bank is actively working to prevent an economic downturn.
Isarescu highlighted that inflation is expected to peak at around 9.7% in the latter half of 2025, driven by higher energy prices and fiscal tightening measures, including increased taxes introduced to consolidate public finances. These factors have put pressure on consumer demand and slowed economic activity. Growth has become precariously fragile, with some quarters showing near-stagnation or slight contraction.
The governor emphasised the importance of rapidly absorbing European Union funds to finance investments that can stimulate economic growth and alleviate fiscal and inflationary pressures. “Accelerating the use of EU funds is one of the best levers to avoid slipping into recession,” Isarescu commented.
Monetary policy remains tight, with BNR maintaining high interest rates to combat inflation but carefully weighing any hikes that could further dampen economic activity. The delicate balancing act involves controlling inflation without choking off growth, a task that remains a significant challenge for policymakers.
The Romanian economy is navigating a narrow path amid external shocks, inflationary pressures, and fiscal consolidation. The coming months will be critical as the government and National Bank of Romania implement measures to steer the country away from recession and toward a more stable economic footing.
For now, the warning from the country’s top financial official is clear: Romania is dangerously close to recession, and both monetary and fiscal policy must be executed with precision to avoid economic contraction.
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