Romania's economy shrinks, trade deficit eases while central bank keeps key rate at 6.5%

Romania’s economy contracted in the first quarter of 2026, with Gross Domestic Product falling 1.2% year‑on‑year (seasonally‑adjusted decline of 1.1%). Revised data show that total household consumption contributed +0.6% to growth, while public administration spending added +0.4%. Sectoral contributions were modest: industry –0.2%, construction +0.4%, and a negative impact from inventory changes of –2.5%.

The trade deficit narrowed by €889.8 million in the January‑May period, reaching €13.505 billion, as exports of vehicles and transport equipment (46.6% of exports) modestly outpaced imports. Trade with EU members still accounts for over 70% of total foreign trade.

The National Bank of Romania (BNR) kept its policy interest rate unchanged at 6.5% on 8 July 2026, maintaining the Lombard rate at 7.5% and the deposit facility at 5.5%. The decision reflects persistently high inflation – 10.85% in May – while BNR projects a slight drop in June and a substantial decline in the third quarter as the effects of electricity price caps, VAT hikes and higher excise duties fade.

BNR warned of internal uncertainties (budget consolidation, political context) and external risks (Middle‑East conflict, global energy shock). Bank liquidity remained comfortable, with excess bank liquidity falling to 28.3 billion lei in June, after previous months of higher surplus.

Retail sales also fell, with total turnover in March‑May down 5.5% year‑on‑year, driven by lower purchases of food, non‑food items and fuels. A modest rebound was recorded in May versus April, but consumption remains below the previous year’s level.