The 2023 European Commission Country Report on Romania offers a comprehensive analysis of the country’s economic, fiscal, and social developments, highlighting both progress and persistent structural challenges. In 2022, Romania's economy demonstrated resilience, recording a real GDP growth rate of 4.7%. This expansion was largely fueled by strong private consumption and investment, despite an adverse international context shaped by rising inflation, global uncertainty, and the economic fallout from Russia’s invasion of Ukraine. However, looking ahead to 2023 and 2024, economic growth is expected to moderate to around 3–3.5%, due to tightening financial conditions, weakening external demand, and the continued impact of elevated inflation. Nonetheless, public and private investment, especially through EU-funded programs such as the Recovery and Resilience Facility (RRF), is anticipated to play a critical role in sustaining economic activity.

Romania’s external position remains vulnerable, with a significant current account deficit of 9.3% of GDP in 2022, driven by a widening trade gap where imports outpaced exports. On the fiscal front, the deficit narrowed slightly to 6.2% of GDP, benefiting from increased revenues amid high inflation and strong economic activity. Yet, further consolidation efforts will be necessary to reduce the deficit below the 3% threshold mandated by the EU's fiscal rules. Without additional corrective measures, Romania risks failing to meet the targets set by the ongoing excessive deficit procedure. The country’s relatively high borrowing costs, reflected in the second-largest bond yield spread in the EU, underline investor concerns despite its current investment-grade rating.

Inflation reached an annual average of 12% in 2022, with price pressures particularly strong in energy and food. Although headline inflation is expected to ease to around 9.7% in 2023, core inflation remains elevated, and price growth has become more broadly embedded across the economy. Measures such as the extension of energy price caps until 2025 have offered temporary relief to households, but they also raise questions about long-term fiscal sustainability and market distortions.

Structural disparities remain a central challenge for Romania, particularly the wide regional differences in productivity and income. For instance, while Bucharest-Ilfov recorded productivity levels at 162% of the EU average, the Nord-Est region lagged at just 51%. Such inequalities are closely tied to uneven infrastructure development, a shortage of skilled labor, and persistent demographic decline in rural and less developed regions. Although the national employment rate increased modestly from 67.1% to 68.5% in 2022, and unemployment fell to 5.6%, these aggregate figures mask deep disparities by region, education level, and age group.

Wage dynamics also reflect the impact of inflationary pressures. In 2022, nominal wages rose by 13.4%, but real wages slightly declined due to the erosion of purchasing power. The government responded by increasing the minimum gross salary in early 2023 to RON 3,000 (approximately EUR 610), and to RON 4,000 (EUR 813) in the construction sector. Despite these increases, Romania continues to face high rates of in-work poverty, which stood at 15.2% in 2021—the highest in the European Union. This is exacerbated by a tax structure that places a heavy burden on low-income earners.

Social inclusion and access to quality education and training remain persistent issues. Romania’s rate of youth not in education, employment, or training (NEET) is among the highest in the EU, at 19.8%, with particularly stark disparities affecting the Roma community and women. The education system struggles to align graduates’ skills with labor market needs. For example, only 8.4% of vocational education and training graduates benefit from work-based learning opportunities, and there is a notable skills mismatch in both urban and rural labor markets.

Energy policy in Romania has taken on heightened importance amid Europe’s broader energy security concerns. The government has introduced broad energy price caps and new taxation measures, including windfall taxes and a solidarity contribution from the energy sector. While Romania’s reliance on Russian gas is relatively limited thanks to its domestic production and diverse energy mix, the country continues to face structural challenges in ensuring a fair and sustainable energy transition.

In conclusion, while Romania has made notable progress in sustaining growth and managing inflationary shocks, the country faces enduring challenges in fiscal discipline, social inclusion, regional cohesion, and the modernization of its education and labor systems. Addressing these issues will be crucial to ensuring a balanced and resilient development path, especially as Romania continues to benefit from unprecedented levels of EU financial support.