AAFBR : Romania is not in recession, but the economy is breathing heavily and showing the first signs of fatigue

Romania is not in recession, but the economy is breathing heavily and showing the fist signs of fatigue, said Flavius Jakubowicz, president of the Association of Financial and Banking Analysts of Romania (AAFBR), noting that the 0.2% decrease in the third quarter of 2025 does not represent an immediate danger, but it is a warning that we cannot ignore.   'The data published by the National Institute of Statistics for the third quarter of 2025 outline an important economic moment for Romania, which requires a balanced and lucid interpretation. According to the official press release, GDP recorded a decrease of 0.2% in Q3 compared to the previous quarter, on the seasonally adjusted series. At the same time, the economy continues to grow at an annual rate, respectively + 1.4%compared to Q 3 2024 on the adjusted series and + 1.6% on the gross series. Overall, in the first nine months of 2025, economic growth reaches 1.4% seasonally adjusted. These figures show a double reality: Romania is not in recession, but the economy is showing clear signs of slowing down. The quarterly contraction is moderate and does not represent, in itself, a reason for panic. We do not have two consecutive quarters of decline, so we cannot talk about a technical recession. However, this minus of 0.2% comes in a tense macroeconomic context, with internal and external pressures that may affect the growth rate in the coming months', explained Flavius Jakubowicz.   He believes that it cannot be ignored that this quarterly decline occurs at a time when the European economy is weakened and external demand remains low. Flavius Jakubowicz considers that, for Romania, major risk comes from within: a budgetary deficit which is very high, which requires tough fiscal consolidation in 2026, high financing costs which limit private investment and a reduced level of productivity, which draws back potential economic growth.   Similarly, the analyst mentioned that the INS revisions for Q2 2025 where growth was downwards adjusted, from 1.2% to 1% show that the economy is not only slowing down but it does it in an abrupt way, more than expected previously. According to him, Romania is in a vulnerable area where growth is little and imbalances are high.   'This economic landscape requires prudence, but not pessimism. There is room for smooth landing of the economy, if the measures of economic policy are concrete and predictable. Budgetary consolidation must be credible, concentrated on expense efficiency and prioritizing investments, no exclusively on taxes increase. The absorption of European funds must be accelerated as they remain the main engine for growth in a difficult global environment. For the private environment, priority remains careful management of liquidities, reduction of exposure to risk and investments in digitalisation and productivity. And for the population, financial prudence is essential in a period with high interests and a changing fiscal policy. In conclusion, Romania is not in recession, but the economy is breathing heavily and gives the first signs of fatigue. The drop of 0.2% of Q3 2025 does not represent an immediate danger, but it is a warning which are not allowed to ignore. If the answer of the economic policies will be a responsible one, the economy may avoid recession in 2026. If not, the risk of economic contraction becomes more probable. This is the reality which the figures present: an inflection point, not a tipping point. It is up to us whether we manage it as a controlled adjustment or as a slide into recession, ' Flavius Jakubowicz also declared.   Gross domestic product fell by 0.2% in real terms in the third quarter of this yea, compared to the previous quarter, after a 1% advance in Q2 compared to Q1, according to signal estimates published on Friday by the National Institute for Statistics (INS). Compared to the same quarter of 2024, Gross Domestic Product registered an increase of 1.6% on the gross series, and 1.4% on the seasonally adjusted series. In the period January - September 2025, the economy grew by 0.8% compared to the same period last year, on the gross series, and by 1.4% on the seasonally adjusted series.