Romania is paying for every month of political uncertainty through higher borrowing costs, delayed investment and postponed decisions, while facing the EU's highest inflation, one of the bloc's largest budget deficits and public debt nearing 60% of GDP, Romanian Association of Financial and Banking Analysts (AAFBR) President Flavius Valentin Jakubowicz said on Thursday.

Speaking at the AAFBR Annual Conference 2026, he warned that the economic model that brought Romania to its current situation - built on consumption, financed through deficits and fuelled by imports - has reached its limits and must be changed.

'The model that has brought Romania this far - built on consumption, financed through deficits and fuelled by imports - has reached its limit. This is not a personal opinion; it is what the data tell us. The real question today is not whether we change the model, but whether we change it by choice or through a crisis. Average consumption per Romanian has reached almost 94% of the European average, a significant achievement. But our productivity stands at only 78%. In other words, we consume almost like Western Europe while producing like an emerging economy. The difference is financed through borrowing,' Jakubowicz said.

He noted that Romania's economy is hovering between stagnation and recession, with inflation of around 11%, one of the EU's largest budget deficits and public debt approaching 60% of GDP.

'Three figures cannot be ignored. Economic growth was just 0.7% in 2025, and this year we are, at best, on the borderline between stagnation and recession. We have the highest inflation in the European Union - around 11% - and one of the largest deficits, at 9.3% of GDP in 2024. With major efforts, we hope to bring it down to around 6% this year. Public debt is approaching 60% of GDP, the only Maastricht criterion Romania still meets, but without adjustment it could rise to 67% or 68%. The European Commission has already warned that risks to the sustainability of Romania's public debt are high over the medium term, with government debt potentially climbing to around 90% of GDP by 2036,' he said.

Jakubowicz added that Europe itself is slowing, while Romania is borrowing at a faster pace and at higher costs than its economy is growing, with its sovereign rating remaining just one notch above non-investment grade.

'Europe itself is slowing. The euro area is expected to grow by only 0.8% this year. The favourable conditions Romania benefited from over the past two decades - cheap money and expanding markets - have disappeared precisely when we need them most. Economic growth of 2.5%-3% a year has reached its limits. Instead of generating lasting prosperity, it has translated into inflation and external deficits. We are borrowing more, and at higher costs, than our economy is growing,' he said.

The AAFBR president outlined five priorities for reshaping Romania's economic model, beginning with productivity.

'We are not here simply to list problems. We are here to discuss solutions. The shift must be from consumption to productivity, from deficits to investment and from low value-added activities to higher value-added ones. The first priority is productivity, not wages. The objective is not a low-cost economy, but a competitive one. Wages should grow alongside productivity, not ahead of it, which means investing in technology, technical education and workforce training, not just nominal pay rises,' he said.

The second priority is reindustrialisation, arguing that Romania has lost more industrial capacity over the past decade than any other EU member state.

'Convergence with Europe will not be won through statistics but in factories and exports. We have lost more industry in ten years than any other country in the European Union. This decline can be reversed only with predictable and competitive energy for industry,' Jakubowicz said.

He also called for prioritising investment over consumption and for a leaner, more efficient state administration, noting that Romania still has access to historic amounts of EU funding but risks losing nearly EUR 9 billion if it fails to absorb the money by the August 31 deadline.

Finally, he stressed that fiscal credibility and predictability are indispensable.

'Every month of political uncertainty costs us through higher interest rates, delayed investment and postponed decisions. Reforms must survive electoral cycles, and OECD accession should become the anchor that finally lowers Romania's cost of capital. We have everything we need - a market, talented people, a strategic position and unprecedented European funds. What we lack is the collective decision to use these resources together. We do not lack solutions; we lack the courage and patience to see them through. Reconfiguring this economic model cannot be postponed until a better moment because that moment will not come on its own,' Jakubowicz concluded. AGERPRES (RO - writing by: Oaba Tilica; EN - writing by: Simona Iacob)

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