Page 42 - bne IntelliNews Southeastern Europe Outlook 2025

Internal and external risks are obscuring the outlook for 2025. Positive base effects in agriculture and moderate fiscal consolidation will probably push the growth rate above 1%. Accelerated implementation of the projects under the Resilience Facility would bring the growth rate above 2%, but this depends a lot on political stability.
At home, possible tax rate hikes and slower household incomes are balancing the growth induced by the continuation of EU-funded projects under the Resilience Facility.
The structure of the economic growth and closing of the twin current account and budget deficit are highly important for assessing the overall economic development in Romania, besides the headline GDP growth rate. The slippage in both areas during 2023, resulting in higher public and external debt, contributed to the headline growth rate in 2023 while the negative base effects in agriculture had an opposite impact. The contribution of the two factors may reverse in 2024.
2.9.2 Industrial production
In the 12 months to October, Romania’s industrial output dropped by
2% y/y, compared with 3.0% y/y contraction in 2023.
The partial recovery in the autumn of 2024 (August-October) didn’t change the long-term downward trajectory.
Romania’s industrial growth continues to hinge on external demand, particularly from the eurozone, where Germany and France saw industrial slowdowns in October.
The country's industrial output registered a modest 1.3% y/y gain in October 2024, coupled with a 0.4% m/m rise in seasonally adjusted terms. Over the three months from August to October, seasonally adjusted output grew by 2.2%, though this followed a sharp 4.2% m/m decline in July, reflecting ongoing volatility in the sector.
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