Here’s what’s caused the confusion Romania’s economy has been a bit of an enigma lately. Its Gross Domestic Product (GDP) is at a standstill, with a quarter-on-quarter growth of 0.0% and year-on-year increase of just 0.2%. This is especially pertinent now as the country contends with increasing food prices, amplifying worries over inflation. In April, the Food Price Index peaked at 128.3. This increase is even more significant due to the ongoing surge in food prices, particularly in the cereal, dairy and meat industries.
Romania’s net wage growth, in March of this year, had leapt to a whopping 9.8% year-on-year. With the increased cost of living, the benefits of this newfound wage growth might be washed away entirely. Romania’s current account deficit has skyrocketed to EUR 7,656 million since the start of the year. This increasing turbulence only makes for a more treacherous economic environment.
Economic Performance Overview
Romania’s stunning economic performance in the first quarter of the year has eyebrows raised across Europe and the world among analysts and policymakers alike. In stark contrast, the GDP numbers show a complete standstill in terms of quarterly growth, as growth has flat lined at 0.0%. Year-on-year, though, this was a slight improvement with an annual growth of 0.2%.
It begs the questions—how sustainable is this growth going forward? The stagnation in GDP growth coincides with a growing current account deficit, indicating that the country’s expenditures are outpacing its income from abroad. The rising deficit threatens the sustainability of fiscal policy and will likely require increased borrowing or a shift in economic direction.
Rising Food Prices Impacting Households
In Romania, the increasing Food Price Index is an acute issue for Romanian families. The index jumped to 128.3 in April, part of a persistent upward shift seen in the index since the start of 2021. The index had a maximum value of 160. Even though it has dropped since then, it is still far above historical averages.
Between 2015 and 2020, the Food Price Index averaged just 95.3, highlighting the substantial increase over the last few years. Sugar and vegetable oil prices saw significant declines, falling by 8 and 4 percent respectively in April. Rising prices for cereal, dairy and meat wiped out these price decreases. This nationwide imbalance has played a significant role in increased inflationary pressures on consumers.
Food inflation is happening at an unprecedented level, and that is concerning. This undermines the purchasing power of families in Romania and jeopardizes macroeconomic stability. Many households are feeling the impact of these price increases, which could lead to changes in spending habits and consumption patterns.
Comparative Economic Context
Romania’s economic woes aren’t happening in a vacuum. Slovakia’s economic indicators provide valuable context for the entire region. In Q1 2025, its real GDP increased 0.9% y-o-y and 0.2% q-o-q. These numbers indicate a much less bleak economic landscape than that of Romania’s standstill.
The differences between the two countries highlight the different economic challenges faced within Central and Eastern Europe. Romania is suffering from rising food prices and an expanding current account deficit. Policymakers can take useful lessons from how Slovakia performed to inform their approaches in future years.