Romania has officially entered a technical recession, after two consecutive quarters of economic decline, according to data published by the National Institute of Statistics.
Although the GDP remained slightly positive for the year 2025 as a whole, economists warn that the imbalances accumulated in recent years are starting to take a toll. Two specialists – Adrian Codirlașu and Adrian Negrescu – argue that the solution is not higher taxes, but the reform of the budgetary apparatus, similar to what Prime Minister Ilie Bolojan is proposing.
Codirlașu (CFA Romania): We are in a stagflation situation
The President of CFA Romania, Adrian Codirlașu, states that Romania is not only facing a technical recession, but a more complex phenomenon: economic stagnation amid high inflation.
“The textbook definition is a technical recession, meaning two consecutive quarters of GDP reduction. (…) The issue is that we are in a stagflation situation, meaning an economy that stagnates with high inflation, close to 10%,” Codirlașu declared to Agerpres.
In his view, the cause is clear: fiscal policy in recent years. “Fiscal policy, especially what happened in 2023 and 2024, (…) has led us to completely unsustainable budget deficits that need to be corrected.”
The Solution: Spending cuts, not higher taxes or interest rates
Codirlașu rejects the idea that increasing taxes or interest rates would be viable solutions.
“If we continue to raise taxes (…) we reduce purchasing power and generate inflation, and we still have economic decline. If we raise the interest rate, we reduce inflation, but we have an even greater economic decline.”
Instead, he says, the adjustment must come from the state: “The solution is reducing the deficit by cutting expenses, because expenses have brought us to this situation, that’s where the correction needs to be.”
The economist adds that European funds could be “a breath of fresh air for the economy,” but accessing them depends on the reforms undertaken.
Consumption, key indicator for Q1
When asked if the first quarter of 2026 could also be negative, Codirlașu said it all depends on consumption trends.
“If what happened in December continues, it means we have overcome the most difficult situation and the economy might at least stabilize in the first quarter. However, if we return to a 4% or 5% consumption decline, the first quarter could also be negative,” he stated.
His message remains firm: “So the solution is fiscal, meaning further reducing the deficit by cutting public expenses.”
Negrescu: Romania is going through a prolonged technical recession
Economic consultant Adrian Negrescu sees the situation even harsher. In a public commentary, he asserts that “Romania is going through a prolonged technical recession, a direct effect of inconsistent fiscal policies.”
“The numbers are cold and relentless - in the past two years, the economy has experienced no less than five quarters of decline,” Negrescu wrote.
For the population, he says, recession is not an abstract notion: “The explosion of energy bills, rising food prices, and the burden of taxes have massively eroded purchasing power, turning statistics into daily hardships for millions of Romanians.”
Cuts or taxes? “A tax on the ‘audacity’ to earn more”
Negrescu also believes that Romania is facing a tough choice: cutting expenses or imposing new tax hikes.
“Although some policymakers are once again waving the flag of progressive taxation - a tax on the ‘audacity’ to earn more - this option is unsustainable in an already fragile economy,” he stated.
He advocates for “cleaning up public finances” and calls for reforming the budgetary apparatus: “It's time for the budgetary apparatus to undergo a similar efficiency overhaul.”
At the same time, he highlights tax evasion, which he calls “a gangrene that distorts the market.”
There are also reasons for optimism
In contrast to the harsh tone in the first part of his analysis, Negrescu sees signs of recovery as well.
“The glass half full shows that inflation is on a downward trend, which will force the National Bank of Romania (NBR) to lower the policy interest rate, making loans cheaper in the second half of the year.”
He adds that “the first signs of recovery are already visible: exports have started to rise again, industrial production shows signs of life, and the decline in retail trade has eased.” If the trend continues, “the second half of the year could finally mark a return to real economic growth.”
Romania has officially entered a recession
Romania has officially entered a technical recession, after data published by the National Institute of Statistics (INS) showed that the economy declined in the last two quarters of 2025. Statisticians have also revised previous estimates downwards, marking the beginning of last year as a contraction quarter.
According to INS, in the fourth quarter of 2025, the Gross Domestic Product decreased by 1.9% in real terms compared to the previous quarter. As the third quarter of 2025 was also negative (-0.1%, revised from -0.2%), Romania meets the definition of a technical recession – two consecutive quarters of economic decline.
For the whole year of 2025, the economy still recorded a modest growth of +0.6% compared to 2024. However, the quarterly evolution indicates significant volatility and a downward trend in the second half of the year, confirming the pressure accumulated on economic activity.