Romania needs sustained fiscal consolidation after 2026 to stabilize public debt and reduce external imbalances, according to the latest forecasts from the Organization for Economic Cooperation and Development (OECD), published on Wednesday.

In the document, in which the OECD forecasts that Romania’s economy will contract by 0.1% in 2026, the organization emphasizes that making public spending more efficient, stronger tax collection and a broader tax base would help improve Romania’s fiscal position. Also, higher labor force participation among young people and women would support Romania’s fiscal sustainability and economic growth, but this would require improvements in education, childcare, inclusive employment policies and the health system. At the same time, the OECD emphasizes that new productivity gains depend on stronger innovation, the adoption of digital technologies, education and a more dynamic business sector, according to Agerpres.

At the macroeconomic level, the organization forecasts that Romania’s economy will grow by 2.5% in 2027, close to potential growth. Investment will be the main driver of GDP growth, supported by a faster absorption of EU funds and, from 2027, by a gradual recovery in private investment, as the global outlook improves and financing conditions ease. Exports will gradually recover with the improvement in external demand, while moderate import growth will contribute to reducing a still large current account deficit. Unemployment is expected to remain around 6% in the short term, before declining in 2027. Risks to these prospects include delays in the absorption of European funds, which could affect investment and economic growth, as well as insufficient fiscal consolidation and excessive wage growth, which could support inflation through second-round effects and exacerbate external imbalances, the OECD says.