Transilvania Bank Prognosis : Economic growth of 1.67% of GDP in 2026 based on five pillars

Economists at Banca Transilvania forecast economic growth of 1.67% of Romania's GDP in 2026, based on five structural factors: national and European investments, industrial recovery, ICT strength, moderate stabilization of consumption, and improved external balance.   ‘In  essence, 2026 is estimated to be the year when Romania’s growth model, based on investments will become more visible, with the potential to improve both medium term productivity and economic resilience’ explains Ioan Nistor, head-economist at Transilvania Bank, in the report sent to investors.   The five factors: I. Long-term public and EU-funded investments, in particular through the Recovery and Resilience Facility (RRF), which will continue to support construction, energy transition, infrastructure digitization, and innovation. II. Gradual recovery in industry, supported by improving external conditions and easing domestic cost pressures. III. Maintaining the strength of the ICT sector, one of the sectors capable of simultaneously generating productivity gains and export growth. IV. Moderate stabilization of consumption, due to easing inflation and gradual recovery of real incomes, although without a return to previous consumption patterns. V. A slightly better external balance, as lower import growth and stronger exports reduce, but do not eliminate, the negative contribution of net trade.   The Central Bank will gradually reduce the key interest rate to 5.75%   Inflation (IPC) is designed to drop significantly, closing 2026 at 43% against almost 10% at the end of 2025. The drop is expected especially in the second half of the year, as ‘ inflation is expected to remain high at the beginning of 2026 and to drop more visibly only during the second half of the year.’ A key role belongs to ‘ moderate stability of consumption, due to the drop of inflation and gradual recovery of real revenues’.   In monetary policy, the Central Bank is expected to maintain its restrictive stance, with "the first rate cut most likely only in the second half of the year, once there is clear and sustainable evidence that inflation is firmly on a downward path." The monetary policy rate is forecast to fall "gradually to 5.75% by the end of 2026" from 6.50%.   The leu/euro exchange rate is projected to depreciate slightly and steadily, ending 2026 at around 5.17, compared to 5.1 at the end of 2025.The risks for more pronounced depreciation include political uncertainties, persistent inflation or fiscal slippage, while a massive inflow of EU funds or a better performance of the foreign sector could support the currency.   In the labor market, the unemployment rate is estimated to be 6% in 2026, compared to 5.9% in 2025. "Planned staff cuts in the public sector and hiring freezes will most likely lead to a temporary increase in unemployment," but "job creation in the private sector should gradually offset the reduction in the size of the public sector," the report says. Unemployment among young people will remain a major vulnerability.   In the fiscal area, the general government budget deficit is projected to narrow to 6.5% of GDP in 2026, from 8.4% in 2025. This improvement is attributed to "the full-year impact of the 2025/2026 consolidation package (wage and pension freeze, higher indirect taxation, spending limits)".   However, public debt continues to rise, estimated to reach "61.8% in 2026" of GDP, up from 59.7% in 2025, as "public debt continued to rise due to large deficits and financing needs."