10 economic themes that will mark the year 2026

The budget deficit. Romania has a new target this year for reducing the budget deficit. It should not be forgotten that Romania is still under the excessive deficit procedure and the government has committed to the European Commission to a phased plan for reducing the deficit over the next four years. Specifically, this year, the deficit should decrease from approximately 8% of GDP in 2025 (Prime Minister Bolojan announced that the year will end with a deficit lower than the one assumed a few months ago) to 6.2%-6.5% of GDP.

Any economist will tell you that the budget adjustment needs to be at an unusually high level, which shows us that this year will again be complicated from the perspective of public finances. Therefore, those who cling to illusory recovery programs, exaggerated fiscal promises, or who promote miracle solutions should be viewed with maximum caution. This year, there will be no simple budgetary options if Romania is determined to respect its commitments and, in this way, be able to rely on creditors and rating agencies.

Inflation. The price index is an unknown. This is shown even by the forecasts that differ greatly, namely between 6.7%, the IMF's estimate, and 3.7%, the level advanced by the BNR. On the domestic front, the major challenge is the liberalization of the natural gas market, which will take place in April this year. The example of the liberalization of the electricity market does not give many reasons for optimism, even though energy specialists believe that the situation will be different, in the sense that the liberalization of the gas market will not lead to such large tariff increases as in the case of electricity.

On the external front, geopolitical movements are so intense that the prices of major raw materials on international markets are difficult to anticipate. As a result, the evolution of inflation in Romania remains unpredictable. However, there is also good news: at this moment, inflation in the eurozone approached last year the "magic" figure of 2% (the European Central Bank's estimate is that this year inflation in the eurozone will be 1.7%), which means that Romania, an important importer, will not be significantly affected by what is called imported inflation.

Salaries in the public sector and pensions. This year will also be a budgetary, social, and political issue. It is the second consecutive year in which salaries paid from public funds and pensions are frozen, an unpopular but necessary measure. For example, starting in July 2025, the growth of real average wages will become lower than inflation, after 2024 ended with 6% above the inflation rate, and in 2023 the growth of average wages was 8% higher than the inflation rate, and certainly public sector salary increases were higher than those in the private sector. In other words, after two years (2023-2024) in which salary increases exceeded the inflation rate, two years of stagnation in public sector salary growth follow (2025-2026).

The leu-euro exchange rate. In recent years, the stability of the local currency against the European currency, with few exceptions, has been commented on in many ways. Exporters have been dissatisfied, claiming that they are losing competitiveness, while other economists have expressed their disbelief in the strength of the local economy represented by the national currency to maintain such small fluctuations against the euro, and finally, many specialists have welcomed the benefits of stabilizing the leu-euro exchange rate. Under normal conditions, this year, the trend of strengthening the euro will continue slowly. CFA Romania, the organization of certified financial analysts, estimates that by the end of this year the exchange rate will reach 5.2 lei for one euro. This means nothing more than continued stability.

Economic growth. Just like in the case of inflation, forecasts for economic growth vary greatly, namely between 0.5% and even 2%. No matter how optimistic we might be, the figure is, let's face it, modest. But it is a signal that the glory years, with GDP growth rates of 6%-7%, are over and, unfortunately, will not return anytime soon. In this context, there are all the reasons for discussions on topics related to growth engines and changing the development model to continue into 2026.

Public debt. In recent years, public debt has increased very rapidly both as a percentage of GDP and in nominal value. The causes of the debt increase are: the budget deficit, which has had levels above 3% of GDP in recent years, which meant new loans, as well as, in some cases, rising yields for loans that were paid in 2025 and will be repaid in 2026. Public debt rose from 35% of GDP in 2019 to over 60% of GDP in 2025 and will continue to grow. Public debt becomes a long-term handicap for the situation in which Romania would like to join the eurozone at some point.

PNRR. The investment and reform plan ends this year and there are no signals from the European Union that it will be extended. It is a crucial year for the PNRR, because beyond the delays in reforms and implicitly in payments made by the European Commission, Romania will need to complete all ongoing projects to avoid risking returning already used funds. This is an important, difficult, but achievable objective.

The SAFE program and defense spending. The European Union, including Romania, will be under pressure in the coming years to increase defense spending, but has available a European financing instrument, SAFE. Romania will be able to attract loans of approximately 17 billion euros by 2030. The European program is not exclusively military; the funds can also be used for civil works with applications in the defense field, such as transport infrastructure. It should also be mentioned that the future amounts borrowed under the SAFE program will have an incomparably lower interest rate than that at which Romania constantly borrows from the domestic or international market.

Public investments. The budget allocations for investments, to which European funds have been added, have been substantial. In recent years, Romania has invested from public funds between 5.5% and 8% of GDP per year, well above the European average. There are two visible problems: investments have contributed more than modestly to economic growth and, despite significant amounts, investments with a leveraging effect on the economy are not visible (with the exception of some sections of highways and the works started on a few new sections of the Bucharest metro). Therefore, a prioritization of financial allocations for public investments should become operational and visible this year, for example, in the construction of the state budget.

The situation in Europe. The year 2026 brings special challenges for the European Union, namely the eurozone. In most European countries, inflation has returned to low levels (the eurozone excels in this regard), which has caused interest rates to fall and implicitly financing to become cheaper. However, the pace of economic growth is modest, and some countries have public debts exceeding 100% of GDP, which forces them to make efforts to reduce the level. Defense spending will be a budgetary priority for all EU states in the coming years.

Successive crises have forced Europe to find solutions: strengthening the banking union, mechanisms for a lender of last resort, and a platform for common loans.

This year, the European Union will seek concrete ideas to resolve the economic and military dependencies that have become very clear in recent years and also to find a way forward between the environmental ambitions stated a few years ago and the opposition manifested on this issue by some politicians, some economic sectors, but also by a part of the citizens. A year with many European themes to which Romania will need to connect and which it should use to solve some of its own problems.