Romania's GDP to grow 3.1% in 2024 - OECD

Cost pressures on households will gradually ease thanks to recovering external demand and high levels of investment which will support the economy, according to the OECD Economic Survey of Romania issued on Tuesday.

Headline inflation stood at 7.4% in January 2024, above the National Bank of Romania's target of 2.5%. However, it represents a significant drop from its peak of 16.7% in November 2022, and is expected to continue decreasing to 5% in 2024 and 3.7% in 2025, as per OECD.

The country's unemployment rate will edge down through 2025 but will remain above pre-pandemic levels. Exports are projected to rise by 2.5% this year, accelerating to a growth of 3.2% in 2025, as foreign demand slowly recovers.

The OECD said it is crucial for Romania to narrow its fiscal deficit by raising tax revenue with less distortion to economic activity.

"Much of government revenue comes from distortive taxes on wages. High social contribution rates deter low-skilled workers from formal employment in a country with a large grey economy and widespread tax evasion," the OECD explained.