Romania is currently experiencing a period of stagflation, with inflation exceeding 10.1% and an economic contraction, and mitigating the effects of the recession depends largely on European funds, says Adrian Codirlașu, president of CFA Romania.
„This is the most unfortunate combination: recession with high inflation. It is difficult to get out of this situation because monetary policies are less effective due to strongly procyclical fiscal policy. The only thing that can work is fiscal policy, namely the continuation of reforms to reduce the budget deficit by cutting spending. There is no other solution, but we are caught with very large deficits and in unsustainable territory, which is the big problem.” explained Codirlașu to Agerpres.
He pointed out that Romania is already in stagflation, given that inflation has exceeded 10% and the economy is showing signs of contraction.
„The most important indicator we need to look at is the change in GDP in the first quarter of this year compared to the first quarter of last year, based on raw data. There we see a decline of 1.71% quarter-on-quarter. That’s a significant drop. That’s why I don’t see how we could avoid a recession this year,” he added.
In his opinion, the evolution of the economy depends crucially on the absorption of European funds.
„If we manage to secure European funds, the recession could be mild, with a GDP decline of up to 1%. But we are heavily dependent on these funds; they are essential. The best-case scenario would be a mild recession, below 1%. Without the absorption of European funds, our credit rating is also at risk.”, also said the president of CFA Romania.
Romania’s economy contracted by 1.71% in the first three months of 2026 on a gross basis compared to the same quarter of 2025, and by 0.21% compared to the previous quarter, the National Institute of Statistics announced on Wednesday.
At the same time, the annual inflation rate rose to 10.711% in April from 9.871% in March, as services became 13.041% more expensive, non-food goods 12.021% more expensive, and food prices by 7.39%.