Romania’s economy stood out in the region with a performance far below expectations at the end of 2024, with results for the whole year being among the weakest in Central and Eastern Europe (CEE), only Hungary having a more anemic GDP performance, according to an Erste analysis.
‘Romania’s economic development was disappointing (0.9% in 2024), despite a nominal wage increase of 13.4% compared to an average inflation of 5.6%,’ the Austrian bank’s economists pointed out.
Moreover, Erste experts forecast a 2% GDP growth for the Romanian economy for 2025, below the CEE average of 2.6% of GDP. The forecast for this year was revised downwards and is more pessimistic than the estimate on which the budget was elaborated, of 2.5% GDP.
CEE, 0.7pp faster average growth than the euro area
Hungary performed worse, with growth of just 0.5% in 2024. On the other hand, Serbia and Poland recorded the strongest growth.
In Serbia, GDP growth was driven by domestic factors, a robust labor sector and real wage growth supporting household consumption. In addition, solid public investments partly reflect preparations for Expo 2027.
Poland’s GDP growth in 2024 is estimated to be among the highest in the European Union.
Average growth in Central and Eastern Europe is estimated at 1.9% in 2024, compared to 0.7% growth in the euro zone.
Average growth in CEE to accelerate to 2.6% of GDP in 2025
In terms of estimates for 2025, GDP growth is expected to accelerate in all Central and Eastern European countries, except Croatia and Slovakia. Erste analysts expect a slight slowdown for Croatia, while Slovakia should maintain a similar growth rate.
Average growth in the region should be 0.7 percentage points higher in 2025 (2.6% vs. 1.9% in 2024).
„We regard investment activity acceleration in 2025 as the main factor to boost growth dynamics,” the report states.
„Unfortunately, recovery will not be as strong as anticipated at the end of 2024. We revised down the growth forecast for the entire year in several countries in Central and Eastern Europe,” Erste economists warn.
Forecast for Romania revised downwards: High risks concerning fiscal outlook
The forecast for the evolution of Romanian economy in 2025 was revised downwards, from 2.8% to 2% of GDP, below the forecast the Government is working with, of 2.5% of GDP.
‘Moreover, downside risks persist in Romanian and are linked to the fiscal outlook. On the other hand, base effects and economic inertia support an acceleration in growth. Consumption growth, which has been the main economic driver, could weaken, given the collapse in consumer confidence in January,’ the cited analysis states.
Serbia’s growth forecast was also adjusted downwards, by 0.7pp, to 3.8% of GDP. Changes were marginal for the Czech Republic and Slovenia. Growth forecasts remain unchanged for the other Central and Eastern European countries (Hungary, Poland, Slovakia).
Inflation lower than in 2024 only in Romania and Serbia
In 2025, only Romania and Serbia are expected to have lower average inflation compared to the previous year, according to the Austrian bank’s forecast.
At the end of 2024, inflation was lower compared to December 2023 in all Central and Eastern European countries. ‘There were fluctuations, however, in inflation developments, while general inflation produced the unexpected surprise of an increase of late,’ the report warns.
In 2025, inflation is expected to increase in most Central and Eastern European countries. In Slovakia, due to increases in indirect taxes and energy prices, inflation could reach 3.7% in 2025, compared to 2.9% in 2024. In Hungary, it could even reach 5%.
In Croatia and Poland, the inflation forecast was revised upwards and is expected to be around 0.5 percentage points higher than expected at the end of 2024.
‘Central banks should resume monetary easing throughout 2025 in all Central and Eastern European countries and continue this process in 2026. The Czech central bank cut its key interest rate in February. In the other countries, benchmark interest rates should also decrease,’ the report said.
However, central banks in Poland, Romania and Serbia are likely to wait until mid-year before resuming monetary easing. Regarding other indicators, Romania also stands out in the region as the country with the highest level of budget deficit (-7% of GDP in 2025; Poland ranks second with -5.8% of GDP) and current account deficit (-7.8% of GDP; Serbia is second with -6.3% of GDP).
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