Investments were the main driver of the economy in the first quarter of 2026 and contributed to mitigating part of the negative impact from consumption and inventory changes, according to data published on Friday by the National Institute of Statistics (NIS).
The broken-down data brought a number of revisions:
– the updated figures now indicate a stagnation of the economy against the previous quarter, compared to a contraction of -0.2% reported in the preliminary estimate;
– in annual terms, the economy is now estimated to have contracted by -1.2%, compared to -1.7% in preliminary estimates;
-1.3 consumption contribution, +0.9% investment
In terms of demand, private consumption reduced the annual GDP outcome by -1.3 percentage points in Q1 2026, while public consumption had a neutral impact. Inventories also had a significant negative contribution of -1.0 percentage points.
On the other hand, gross fixed capital formation – investments – added 0.9 percentage points, and net exports, +0.2 percentage points.
„Demand structure is largely in line with our expectations and confirms the signals observed in high-frequency data. We expect consumption to continue to be a drag on economic growth at least in the next few quarters. In this context, maintaining a sustained pace of investment growth becomes essential to avoid a deeper recession,” Erste economists state in a note to investors.
In terms of supply, only construction pushed GDP up in Q1
In terms of supply, agriculture had a neutral contribution to the annual GDP dynamics in Q1 2026.
Industry cut economic growth by -0.2 percentage points, while construction was the main positive contributor, with +0.4 percentage points.
The services sector had a significant negative contribution of -1.3 percentage points, with the only positive signals coming from entertainment activities. Net taxes had a neutral contribution.
Investment activity to accelerate, but economy will contract this year
Erste economists continue to anticipate a moderate recession in 2026, with a real GDP contraction of 0.3%, after the disappointing 0.7% growth in 2025.
“Consumption is expected to remain modest this year, as suggested by high-frequency data, amid high inflation, which keeps real wage growth in negative territory throughout the year. However, investment activity should accelerate, supported by the significant European funds available to Romania in 2026. Policymakers seem determined to maximize the absorption of these resources, which should provide an important boost to capital formation and partially offset the weakness in private consumption. Net exports could bring a positive surprise this year, given the evolution of the trade balance in the first quarter,” they note.
European Commission: The consumption-based model has exhausted its potential, future growth depends on innovation
Q1’s performance also seems to confirm the European Commission’s recent warnings about the limits of Romania’s growth model. Having reached approximately 78% of the EU average in GDP per capita at purchasing power parity, the economy can no longer advance at the same pace by stimulating consumption.
Labor productivity growth has slowed significantly, from around 4.5% per year, between 2015 and 2019, to around 2% per year between 2020 and 2025. The Commission notes that progress has been concentrated in foreign-owned industrial clusters in the automotive, pharmaceutical, chemical and electronics sectors. Romania ranks last in the EU in the European Innovation Scoreboard 2025, at 37.7% of the European average, with a stagnant R&D expenditure intensity of around 0.5% of GDP, compared to the EU average of 2.2%.
According to the Commission’s analysis, future convergence will increasingly depend on investment, innovation, digitalization and productivity growth, as the contribution of domestic consumption diminishes.
Drastic forecast revisions
The outlook for the rest of the year remains difficult. The European Bank for Reconstruction and Development (EBRD) has significantly revised its forecasts for Romania downwards and now estimates a GDP contraction of 0.2% in 2026, compared to a previously anticipated 1.2% growth. The institution cites the effects of weak consumption, still high inflation and the impact of fiscal consolidation measures.
For 2027, the EBRD estimates a modest recovery, with economic growth of 1.8%, but this forecast is also lower than the one previously published. In parallel, the European Commission made one of the most severe revisions to the forecast for Romania in recent years, lowering the growth estimate for 2026 to 0.1%, compared to the previously anticipated 1.1% — the most drastic revision in the EU.
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