What should we expect in 2026: Taxes stop rising, but the economy will grow? How do we avoid stagnation?

At the end of a difficult year with much political turmoil, macroeconomic volatility and tax hikes, the most pressing question for business leaders is how long the economic correction will last and whether growth will resume.

A first indicator of economic realism and recovery plans will be the draft of the public budget, expected to be published only in January. This will give us a picture of the fiscal-budgetary situation and the likely measures next year.

In any case, the recalibration period started in the summer of 2025, through tax increases and still insufficiently convincing measures in the area of ​​public spending, will continue even if the government gives assurances that taxes will not increase. It is quite likely that we will no longer face tax increases of the magnitude experienced in 2025, but adjusting the budget deficit by 2 percentage points of GDP, i.e. by about 40 billion lei, will mean a great challenge.

Indeed, many of this year's decisions will be reflected in the revenues and expenditures of the state next year, much more meaningfully, but the deficit reduction target will only be reached if there is a lot of firmness in the management of public resources both in the area of ​​revenues – with an emphasis on better collection – and expenditures where so far no visible impact has been observed.

Therefore, political stability, which would mean that decisions will continue in the same direction, will be extremely important. Moreover, the IMF representatives were optimistic at the last assessment in December 2025 when they showed that the measures taken are sufficient to reduce the budget deficit and from now on, consistency is needed to continue the fiscal consolidation trajectory. But, as we know, politics is unpredictable and a change of alliances can also mean a deviation from the current fiscal-budgetary plan.

For the business environment, some fiscal predictability, a respite in 2026 would be more than welcome. At the same time, the question of economic recovery remains.

After impressive real GDP growth rates of 5.5% in 2021 and 4.0% in 2022, the economy faces anemic growth, inflation and large deficits from 2023 onwards. And the slowdown was not entirely accidental or related to global tensions, but induced by fiscal policies that were extremely generous relative to the public budget's ability to support them.

The numbers tell a worrying story. GDP growth was modest in 2024 at 0.8%, and is estimated at best to be 1% in 2025. And these increases are taking place in a context where public investment (combining EU funds, including NRDP, and allocations from the national budget) reached 6.8% of GDP in 2024 and would reach 8% in 2025, the highest level in the last decade.

The latest European Commission forecast (from November 17, 2025) estimates that Romania's GDP will grow by 0.7% in 2025 and 1.1% in 2026. The IMF forecasts an economic growth of 1% in 2025 and 1.4% in 2026, and the World Bank indicates 1.3% for this year and 1.9% for 2026.

Has the growth pattern stalled? What's next?

The numbers do not show dynamism despite the stimulus for economic growth. Has Romania's growth model stalled? Most likely not yet, but it is quite obvious that alternatives must be found. With rates of 1% per year we can no longer recover the gaps compared to the European average. The large deficits are the results of a consumption growth model showing its limits. Romania should switch to a model oriented towards investments and productivity. Fiscal discipline, public administration reform, institutional and legislative architecture are essential for a sustainable economic model, for which reforms and a development vision are needed. Foreign direct investments in the period January-October 2025 totaled 7.24 billion euros, up by 28.6% compared to the same period last year (5.63 billion euros), public investments will reach 8% of GDP this year, with inflows from European funds, including from the PNRR being decisive. However, the economy seems to have run out of steam.

In addition, a lot of changes affect and will affect the world and, implicitly, Romania: the convulsions in global trade, the tariff war, the modification of supply chains, the relocation of production. Demography is also another risk factor, due to the aging of the population and the need to provide for pensions and healthcare. The labor force is under pressure from AI and other technologies, which will not necessarily “steal” jobs, but which will dramatically transform them over time and impose new skills and, therefore, a different labor market and a different educational model.

All these changes require a different growth model where investment and innovation are defining. We recently analyzed the investments of the countries of the region in Romania and those of Romanian companies in the respective states and the conclusion was that more courage and more ambition is needed. Romanian companies must expand, and Romania must not only be an investment destination, but also an important investor. In conclusion, investment, innovation and new technologies should be the priorities of the new economic growth model to cope with global changes.

Daniel Anghel, Country Managing Partner PwC Romania

Article supported by PwC Romania