The Romanian leu is overvalued by about 10%, according to a UN report. What price increases does the international organization estimate in Romania for 2026
According to the “World Economic Situation and Prospects for 2026” Report, published by the UN, Romania's currency is overvalued by about 10%. The organization calculated the real effective exchange rate (REER), a way of valuing a currency against multiple trading partners, adjusted for inflation differences, which also shows how competitive a country is in terms of prices internationally.
A simple course tells you: 1 Euro = 5.08 lei.
But this shows a bilateral relationship. The effective exchange rate compares the currency to the currencies of all major trading partners.
Let's say that Romania trades with: Germany (40%), Italy (20%), Poland (15%), China (15%) and the USA (10%)
The real effective exchange rate will compare the leu with all these currencies, then adjust the result by the share of each trading partner and take into account the differences in inflation.
Thus, you get a realistic measure of external competitiveness, not just against the euro.
If the effective real exchange rate of the leu is 110 (comparison year is 2012), it means the following: The leu is appreciated in real terms (by ~10%) compared to 2012, and Romania is less competitive in exports.
Because: internal prices rose faster than external ones, or because the leu appreciated against the currency basket, or both.
The governor admitted in 2025 that the leu is over-appreciated by about 5%, after, a year before, the same was confirmed by Valentin Lazea, the chief economist of the National Bank of Romania (BNR). “Taking inflation into account, the leu is overvalued by at most 5%, a percentage that does not represent the most important obstacle to the competitiveness of Romanian exports,” said Valentin Lazea.
Practical implications
For exporters: Romanian production becomes more expensive on foreign markets, so foreign demand may decrease.
For importers: imports become cheaper for Romania, so the increase in imports of goods/services is stimulated.
Implication on the current account: A high REER tends to worsen the trade balance, because exports fall and imports rise.
According to the UN, Romania's economy will grow by almost 2% this year, and inflation will drop to 6.1%. In the BNR projection, this year will end with an inflation of 3.7%. We remind you that the annual inflation rate in November 2025 compared to November 2024 was 9.8%.
What else does the UN Report show?
Global economic growth is forecast to slow to 2.7 percent in 2026 from 2.8 percent last year, before picking up to 2.9 percent in 2027, according to the United Nations.
The report also found that while the sudden increase in US tariffs in 2025 created new trade tensions, the absence of a wider escalation helped limit disruptions to international trade.
“Despite the tariff shock, global economic activity proved resilient, supported by anticipated shipments, stockpiling and strong consumer spending amid monetary easing and stable labor markets,” according to the UN Department of Economic and Social Affairs report.
The document also shows that economic growth in the United States slowed to 1.9% in 2025 – from 2.8% in 2024 – and is expected to increase to 2.0% in 2026 and 2.2% in 2027, helped by expansionary fiscal and monetary policies.
It said US inflation is likely to remain above the 2% target in 2026, “although it should gradually decline as the impact of tariffs diminishes and housing costs stabilize.”
In China, the economy is expected to grow by 4.6% in 2026 and 4.5% in 2027, up from an estimated 4.9% growth in 2025.
Economic growth in the European Union was forecast at 1.3% in 2026 and 1.6% in 2027 – compared to 1.5% in 2025 – due to resilience in consumer spending. However, higher tariffs imposed by the US and geopolitical uncertainty are likely to affect exports, the report added.
Economic growth in India is estimated at 7.4% in 2025 and projected at 6.6% in 2026 and 6.7% in 2027, supported by strong consumption and public investment, which should largely offset the negative impact of the increase in tariffs imposed by the United States, the authors of the report also note.
