Country Risk Report

Romania

Last update – June 2026

Country rating

SENSITIVE RISK FOR ENTERPRISE

Economic risk

Business environment risk

Political risk

Commercial risk

Financing risk

The country risk assessments are your North Star metrics to make the right decision for your business and understand the risks in international trade.
We have always the best solution for your needs

Swipe to view more

Form of state	Republic
Head of state	Nicusor Dan (President)
Next elections	2028, legislative

Strengths & weaknesses

EU membership and fairly good international relations
Competitive industrial sector
Low unemployment
Adequate business environment

Government instability
Lack of structural reforms in key economic sectors
Weak public finances
Large annual current account deficits, with modest coverage through net FDI inflows 
High external debt burden

Economic overview

Cyclical risks

Economic growth in Romania has weakened markedly over the past two years. After a strong post-EU accession convergence phase, activity slowed sharply in 2024, with real GDP growth easing to +0.9% as robust private consumption supported by strong wage growth was more than offset by a contraction in investment. Weak exports, a surge in imports and adverse weather conditions affecting agriculture further weighed on activity, while widening fiscal and current account deficits added to macroeconomic pressures.

Growth dynamics in 2025 remained similar to 2024, with real GDP expanding by around +0.9%. Despite still-solid household consumption, activity is constrained by weak capital formation, subdued external demand and heightened political uncertainty, which weighed on confidence and delayed investment decisions. As a result, the output gap is estimated to have turned negative, signaling underutilized capacity in the economy.

Looking ahead, the recovery is expected to be uneven. Growth is projected to slow further to around +0.7% in 2026, reflecting the drag from necessary fiscal consolidation aimed at addressing widening twin deficits, as well as still-weak productivity dynamics. A more meaningful rebound is expected only in 2027, when real GDP growth could accelerate to around +2.0%, supported by a more neutral fiscal stance, improved confidence and a stronger contribution from EU-funded investment as NGEU projects mature.

Inflationary pressures intensified sharply in the second half of 2025, driven by a sequence of strong supply-side shocks. Headline CPI inflation accelerated markedly in Q3, reaching close to 10% y/y, following the removal of electricity price caps in July and the implementation of fiscal measures in August, including VAT and excise duty increases. These shocks overlapped with still-elevated unit labor cost growth, particularly in food production and market services, amplifying second-round effects through production prices.

Looking ahead, headline inflation is expected to remain elevated until mid-2026, reflecting the lingering impact of recent tax increases, the delayed effects of earlier energy price liberalization and the planned removal of the natural gas price cap in early 2026, alongside residual effects from the 2024 drought. As these factors gradually fade and demand pressures ease amid a negative output gap, inflation should decelerate more meaningfully. Inflation is expected to remain high at around 7.0% in 2026, and fall to around 3.2% in 2027, moving back within the NBR’s tolerance band.

Financing risks

Romania’s financing risks have increased markedly amid a pronounced deterioration in both public and external balances, resulting in a widening twin-deficit position. The fiscal deficit rose sharply to 8.7% of GDP in 2024, driven by large pension and public wage increases as well as elevated election-related spending. At the same time, the current account deficit widened to 8.2% of GDP, reflecting strong import growth, weak export performance and a deterioration in cost competitiveness. As a result, Romania’s external position is assessed as substantially weaker than implied by fundamentals and desirable policies.

Despite maintaining an investment-grade sovereign credit rating, all major rating agencies have revised the outlook to negative, underscoring concerns about fiscal sustainability and financing vulnerabilities. The widening current account deficit has increasingly been financed through debt-creating flows, with portfolio and other investment accounting for more than two-thirds of external financing, increasing exposure to shifts in global risk sentiment.

The authorities have adopted a sizeable fiscal reform package aimed at restoring fiscal and external balance, including tax increases and expenditure restraint measures. However, financing risks remain elevated due to still-large deficits, rising public debt and slow absorption of EU funds, with NGEU disbursement at around 38% and structural funds near 17% of committed amounts as of mid-2025. Weak administrative capacity and procurement bottlenecks continue to weigh on investment execution. Overall, Romania’s financing risks are high, reflecting the interaction between fiscal slippage, external imbalances and constrained policy buffers.

Structural business environment risks

The business environment is generally adequate, though pockets of weakness remain. The World Bank Institute’s annual Worldwide Governance Indicators surveys suggest that regulatory and legal frameworks are generally business-friendly, while weaknesses persist with regard to perceived corruption. The Heritage Foundation’s Index of Economic Freedom 2025 ranks Romania 51st out of more than 180 economies, reflecting strong scores in property rights, tax burden, trade freedom and investment freedom. However, weaknesses remain in government integrity and fiscal health.

In Allianz’s proprietary Environmental Sustainability Index, Romania ranks 54th out of 210 economies, reflecting favorable scores for energy use and CO₂ emissions per GDP as well as water stress. At the same time, structural gaps persist in renewable electricity output, recycling rates and resilience to climate events, which could weigh on longer-term competitiveness and investment attractiveness.

Political risks

Romania experienced a period of heightened political volatility in 2024–25, marked by an unusually contentious presidential election cycle. The initial presidential vote in late 2024 was annulled following credible allegations of foreign interference and campaign irregularities, triggering institutional tensions, protests and elevated political uncertainty. The rerun election in May 2025 ultimately resulted in the victory of pro-European independent candidate Nicușor Dan, defeating hard-right challenger George Simion and easing concerns about a potential shift away from Romania’s pro-EU and pro-NATO orientation.

The resolution of the electoral dispute and the formation of a new governing coalition in mid-2025 have helped restore short-term political stability and reduced immediate policy uncertainty. However, the episode highlighted persistent societal polarization, declining trust in institutions and the growing appeal of anti-establishment forces. While democratic institutions proved resilient, political risks remain elevated relative to the past, particularly around reform implementation, coalition cohesion and public support for fiscal consolidation. Overall, the near-term political environment is more stable, but medium-term risks linked to governance and social fragmentation persist.

Hall of Minds

Road to Milano Cortina 2026

Allianz Careers

Sustainability at Allianz: On a joint path

Powering ahead: Global Wealth Report 2025