Output in the Romanian economy is projected to increase by 6% in 2021 and 4.6% in 2022. Investment and pent-up demand will be the main growth drivers. Consumption will pick up as the vaccination rollout progresses and restrictions on activities are eased, leading to a decline in saving. Imports will increase faster than exports due to strong domestic demand. The unemployment rate will decrease gradually as the recovery gains momentum, returning to its pre-crisis level in 2022.
Fiscal policy should remain accommodative until the recovery is firmly underway. Efforts to increase revenues, mainly through improvements in tax collection, should be strengthened. Romania is set to receive significant amounts of EU funds, which, if swiftly and effectively absorbed, will be crucial for boosting investment and supporting vulnerable firms and individuals, given the limited fiscal space. Greening the energy mix, developing digital infrastructure and reducing regulatory barriers to competition are essential to achieve a sustainable recovery.