Romania ended 2024 with a deficit of 9.3% of GDP, the highest in the European Union.
A Romanian mortgage costs about 6.5%, against about 3% in the eurozone. The OECD sees a gradual fall towards 4%.
On 1 August 2025 VAT rose from 19% to 21%, and every new apartment became two points more expensive.
Dividend tax rose from 10% to 16% in January 2026, changing the maths for holding property through a company.
After 0.1% growth in 2026, the Commission forecasts 2.3% in 2027 and a deficit of 5.8%.
"But I read the economy there is stuck. Isn't that risky?"
I get this question almost every week, usually after a headline about the deficit, new taxes or zero growth.
And my answer always starts with the same admission: 2026 is not a comfortable year for Romania's economy. Taxes went up, inflation bites, growth is close to zero.
But the real question is not whether there is pain. It is what kind of pain. In this article we try to answer that with data, not with feelings.
Romania's economy in 2026: declining, or in rehab?
There are two kinds of countries that suffer.
A declining country suffers and does not improve. Debt grows, there is no plan, and next year looks like the last.
A country in rehab suffers now in order to recover later. It raises taxes, cuts spending and pays for it with low growth, to close a hole opened in previous years.
The difference is not semantic. It is measurable, and the European Commission's data shows which side Romania is on today.
How do you tell them apart? Check three things: is the deficit falling, is there a plan agreed with an outside body, and is there a timetable you can track. In Romania in 2026, the answer to all three is yes: the deficit is falling year on year, the plan is coordinated with the European Commission, and the correction target is set for 2030.
Where it started: a 9.3% deficit and the interest rate it holds up
Romania ended 2024 with a deficit of 9.3% of GDP, the highest in the EU, after years of public-sector wage and pension increases.
A deficit like that goes straight to the pocket of anyone taking a mortgage: it keeps interest rates high. That is why a Romanian mortgage costs about 6.5% today, while in the eurozone borrowers pay about 3%.
That gap is not fate. It is the price of the deficit. We covered interest rates, wages and Bucharest's own figures in our article on Bucharest's real numbers in 2026.
The austerity package: two measures that touch your deal
The government that took office in 2025 chose full rehab: an austerity package worth about 5% of GDP, according to ING Think. Two of its measures directly affect anyone buying property.
A comfortable market is a priced market.
- VAT rose from 19% to 21% on 1 August 2025. Every new apartment became two percentage points more expensive overnight. ANCPI data shows a peak in transactions in July 2025, right before the increase: the market did the maths and hurried.
- Dividend tax rose from 10% to 16% in January 2026. That changes the calculation for anyone considering holding property through a Romanian company. For all the holding costs and taxes, see our article on the costs of owning property in Romania.
The lesson: in Romania, regulation and taxation changed twice in the past year. Buyers need to check the rules in force on the day they sign, not last year's guide.
Rehab in numbers: what the Commission and the OECD forecast
Here is the data, according to the European Commission's Spring 2026 forecast and the OECD:
| Indicator | 2024 | 2025 | 2026 (forecast) | 2027 (forecast) |
|---|---|---|---|---|
| Deficit, % of GDP | 9.3% | 7.9% | 6.2% | 5.8% |
| Growth | - | - | 0.1% | 2.3% |
The OECD expects interest rates to fall gradually towards 4% as inflation converges.
The cost of rehab is visible: 0.1% growth this year, almost stagnation. But the direction is clear: the deficit is falling, and 2027 is expected to look different.
What does that mean for the market? As long as rates are high, fewer people take a mortgage and buy. When rates start to fall, mortgages get cheaper, and buyers who waited will come back and compete for the same properties. In a year of stagnation, there are fewer competitors around the table. That says nothing about future prices, but it changes the terms of negotiation. On what that means in practice, and how to deal with a seller in a year like this, see our article on the transition year.
The paradox: a frozen economy, yet prices rose
If growth is close to zero, how did housing prices in Bucharest rise? There are three explanations:
- VAT rolled into prices. Part of the rise in new-build prices is tax, not market. That is critical when comparing a new apartment with a resale one.
- Public investment at a record. The 2026 budget allocates about 8% of GDP to infrastructure, a historic high, funded by the EU. 2026 is also the final year of the EU Recovery and Resilience Facility (RRF), so the money is flowing now into roads, the metro and infrastructure.
- Supply responds slowly. Construction takes years, and Law 207/2025 (the "Nordis law") requires developers to put in more equity and slows new project launches.
The risks, on the table
Sensible investors do not ignore risks. They price them. These are the main ones:
- Excessive deficit procedure. Romania is still under the EU procedure, with a correction target of 2030.
- EU funds. Missing targets could delay money, and with it infrastructure projects.
- Inflation. It erodes the income of local families.
- Changing rules. Taxes and rules changed twice in the past year, and there is no guarantee they will not change again.
So the rule I keep repeating: buy a property that makes sense even without the optimistic scenario. A location that holds demand, a clean legal structure, and a use you actually need. The recovery, if it arrives in full, is a bonus. Not the thesis. And for anyone worried about a 2008-style crash, we answered that separately in "Is Bucharest heading for a 2008-style crisis?".
Frequently asked questions
Is Romania's economy in crisis in 2026?
It is in a slowdown year, with forecast growth of 0.1%, but the deficit is falling: from 9.3% of GDP in 2024 to 7.9% in 2025, and a forecast 6.2% in 2026. That is a picture of rehab, not decline.
Why are mortgage rates in Romania higher than in the eurozone?
Mainly because of the deficit and inflation. A Romanian mortgage costs about 6.5% today, against about 3% in the eurozone. The OECD expects a gradual decline towards 4%.
What changed in VAT on new homes in Romania?
VAT rose from 19% to 21% on 1 August 2025, and the increase passed directly into the price of new apartments.
What changed in Romanian dividend tax in 2026?
Dividend tax rose from 10% to 16% in January 2026. It mainly affects people who hold property through a Romanian company.
What are the main risks in Romania's economy?
The excessive deficit procedure until 2030, possible delays in EU funds, inflation eroding local incomes, and frequent changes to regulation and taxation.
The bottom line
Romania's economy in 2026 is not comfortable, and that is exactly the point: a comfortable market is a priced market. Anyone who wants full certainty and the conditions of a quiet market at the same time is looking for something that does not exist anywhere.
The deal on the table is easy to understand: you absorb the discomfort of a slow year and worrying headlines, and in return you meet a market with fewer competitors. But only if the property itself is right.
If you want to go through this picture against your specific deal, in our project in Balotești or anywhere else, book a 30-minute call with me.
Moti Azulay, Compass Group Romania
Sources and data: European Commission, economic forecast for Romania (Spring 2026) · OECD Economic Surveys: Romania 2026 · ING Think · National Agency for Cadastre and Land Registration (ANCPI) · National Bank of Romania (BNR) · Romanian tax administration (ANAF) · PwC, Worldwide Tax Summaries: Romania · Romanian legislation portal
This article is for general information only and is not legal, tax or financial advice. Economic forecasts may change and do not guarantee future prices. Consult local professionals before any transaction.
Now you know more.
This article is general information, not legal, tax or financial advice. Consult local professionals before any transaction.
