The gap between living standards in Romania and its CEE peers continued to narrow rapidly over the past 5 years.
During 2016-2020, Romania recorded the fastest economic expansion among the countries in the region: average annual growth rate of 3% for real GDP. Real GDP per capita increased even faster during the same period: average annual growth rate of 3.6%.
However, the fast real convergence process went along with a substantial increase of structural public budget deficit and of public debt. Moreover, the funding needs of the public sector have to be covered to a large extent from foreign borrowings. So, the Romanian economy has become more vulnerable to adverse shocks. The funds Romania is due to receive from the EU Recovery Plan should be of great help going forward, having the potential to alleviate such vulnerabilities.
GDP figures for the year 2020 are based on European Commission’s forecasts from November.
