Updated: 17 September 2026 la 11:19. Articolul a fost revizuit pentru a reflecta informațiile disponibile la această dată.
Mugur Isărescu, Governor of the National Bank of Romania (BNR), has issued a serious warning: Romania faces a real risk of recession. It comes amid a major revision of the 2025 inflation forecast, in the context of tax increases and the removal of the electricity-price cap—measures with a direct impact on households and the economy.
Why is inflation rising so sharply?
According to the recent statement, the BNR raised its estimate for inflation at the end of 2025 from around 4.6% to an alarming 8.8%. The main reasons are two specific factors:
- The removal of the electricity-price cap—a measure expected to add around 2 percentage points to inflation
- Higher VAT and excise duties—another factor estimated to contribute around 4 percentage points
Isărescu estimates that inflation will peak at between 9.6% and 9.7% in September 2025, before easing towards the end of the year.
Monetary policy: high interest rates to counter inflation
In response, the BNR decided to keep its policy rate at 6.5%, one of the highest levels in the EU, ruling out any monetary-policy easing in the short term.
The real risk of recession: basis and interpretation
Isărescu explained that restrictive fiscal measures—on taxes and energy—will reduce domestic demand, curbing consumption and putting pressure on production. Although he did not explicitly predict a recession, he stressed that it “is not ruled out” in light of these pressures.
He also called for faster absorption of European funds as a way to stimulate aggregate demand without fuelling inflation—a solution considered essential to avoiding a recession.
For more information on Romania’s economy, see Inflation has reached 10.7%: why Romanians are paying more even as wages fail to keep pace, which provides complementary details on this subject.
Broader context: political and economic uncertainties
Domestic factors overlap with external ones, exacerbating the economic risk:
- Deep political instability—following the presidential election and the government’s resignation, the risk of recession has increased significantly. Radu Burnete of Concordia warns that, without a functioning government, investment could be lost and the economy could slip back into recession.
- Difficult access to external financing—S&P warns that the political crisis threatens the absorption of EU funds and the issuance of eurobonds, negatively affecting the leu and borrowing costs.
Inflation and economic growth: figures and scenarios
Recent statistics point to a slow recovery:
- Annual inflation rose to 7.84% in July 2025, its highest level since October 2023.
- Economic growth was modest: +0.3% in Q1 2025, following +0.5% in Q4 2024. The unemployment rate declined slightly in Q2, but hiring intentions fell significantly.
- Romania’s economy is growing more slowly: recent estimates put growth at about 1.9% for 2025, below the 2.5% budget target—a situation compounded by the large budget deficit and political volatility.
What had Isărescu and the BNR previously said about recession?
In the past, Isărescu firmly stated that the BNR aims to reduce inflation without causing a recession, through calibrated and balanced policies.
He also stressed the danger of a recession: “it would worsen the fiscal situation and the impact on inflation”—a clear signal that an economic contraction would be counterproductive in a fiscally fragile context.
At the same time, the BNR has viewed fiscal correction as the solution, rather than stopping deficit financing, since doing so could trigger a financial, economic, social and political crisis, following the model of the 1990s.
Recommended measures to avoid a recession
Based on BNR statements and analysis, the key recommendations include:
- Maintaining a firm monetary policy until inflation stabilises
- Targeted fiscal measures—protecting vulnerable people without fuelling broad-based inflation
- Faster absorption of EU funds—to support demand, investment and macroeconomic stability
- Political stability and government credibility—essential to preserving the credit rating and investor confidence
- Strategic sectoral support—in key industries, including automotive, IT and furniture, which are affected by external tariffs, lower demand or vulnerability to fiscal reforms
Short- and medium-term outlook
Navigating this difficult period will require monitoring several key indicators:
- Inflation trends—if inflation remains high, the risk of a technical recession, defined as two consecutive quarters of contraction, increases
- Fiscal decisions—over the next three months, new taxes or subsidies could change the direction
- Access to financing—the rollout of EU funds and the conditions for issuing government debt will determine costs for the economy
- The state of the labour market and consumption—significant declines would signal a fragile deterioration in household conditions
Mugur Isărescu’s message is clear: Romania is not yet in recession, but the risk is real if the combination of accelerating inflation, fiscal austerity and political instability persists. The best offsets are prudent monetary policy, well-targeted social measures and rapid absorption of European funds—all within a stable and credible governance framework.
This analytical article is based on the BNR governor’s official statements and the August 2025 inflation report, corroborated by recent economic analyses. For financial decisions, consult a licensed specialist.
