INS data show that for every 100 lei produced in Romania in the first three months of 2025, 98.8 lei were produced this year. Who pulled the economy down?
Data published on Friday by the National Institute of Statistics show that GDP fell by 1.2% compared to the same quarter in 2025. Investments – the only bright spot.
- Who pulled the economy down?
- And what happens to retail sales.
Household spending fell by 1.8% in real terms – a contraction that alone shaved 1.2 percentage points off GDP growth. Simply translated: if Romanians had bought as much as in the spring of 2025, we would not have had an economic downturn.
But they didn't buy. And the monthly data confirms the picture – retail sales have remained in negative territory for nine consecutive months. Food, clothing, fuel – all decreasing. It's not a matter of preference, but of purchasing power squeezed by inflation, high loan rates and a general feeling that it's better to be cautious and put some money aside because you don't know how long the turbulence will last.
Trade, transport and HoReCa saw their activity fall by 3.1%, a negative contribution of 0.8 points to GDP. IT, the star sector of the economy in the last decade, also lost 4.1% of its volume. Professional services – consulting, accounting, architecture, marketing firms – contracted by almost 4%.
Against the background of this gray picture, there are also two islands of growth: construction (+7.9%) and cultural activities (+11.6%). The first reflects, in part, public works and projects with European funding that continue regardless of the state of private consumption. The second – maybe a return of Romanians to concerts, theaters and parties, even when food or clothes cost more.
The only engine still running: investments
Gross fixed capital formation – i.e. investments in machinery, buildings, equipment – increased by 4.7% in real terms, contributing +0.9 percentage points to GDP. It's basically the only shock absorber that prevented a steeper fall. Without investments, the minus would have exceeded 2%.
Exports contributed positively (+0.2 points), which means that external demand partially supported Romanian producers even when domestic demand was retreating. A sign that some companies have compensated for the loss of the local market by selling abroad.
BRD analysts, in a note published on Thursday, warn that, beyond an effective recession this year, the Romanian economy could was evolving towards a more adverse scenario from the perspective of its depth and severity. “For now, we maintain our basic view, with the GDP contraction in Q1 2026 (-1.7%) serving as the median estimate for the decline for the whole year”, claim the authors of the report: Florian Libocor (Chief Economist, Head of Research), Laura Simion CFA (Team Coordinator), Ioan Mincu (Senior Economist) – BRD
