Romania has officially entered a technical recession, after two consecutive quarters of economic contraction, but the major risk is not the statistical setback, but the combination of the economic slowdown and the adoption of too rapid fiscal measures, claims the president of the National Confederation for Women's Entrepreneurship (CONAF), Cristina Chiriac.
"Romania has officially entered a technical recession. Indicators confirm two consecutive quarters of economic contraction, and the annual growth of approximately 0.6% does not contradict this reality, but rather explains it: the economy is no longer advancing, but slowing down. We are not yet talking about a major crisis. However, we are talking about the economy entering an area of ??fragility. And economic experience shows that it is not the statistical recession that produces the greatest costs, but the reactions to it. The main brake on the economy in the last year has been the decrease in consumption," said Cristina Chiriac, in an analysis entitled: "Romania has officially entered a technical recession. It is not an economic drama, but it can become one of behavior."
In his opinion, the VAT increase and the acceleration of prices reduced purchasing power, and the effect was immediate: retail sales decreased by approximately 2% in 2025 compared to 2024.
"For an economy largely dependent on domestic demand, this evolution is not marginal, but central. When consumption decreases, companies sell less, investments are postponed, and the economic slowdown is transmitted from one sector to another. This mechanism is not new. John Maynard Keynes explains that the level of employment and economic activity are determined by effective demand - people's real desire to consume goods and services. When real incomes are eroded by inflation or job insecurity appears, consumption decreases. When consumption decreases, entrepreneurs become reluctant to invest. And the reduction in investments produces new cost adjustments, sometimes layoffs, which leads to a new decrease in demand," mentioned the CONAF president.
In this context, what economic theory calls the "paradox of thrift" appears.
"Individual decisions are prudent and rational: people save more, companies reduce risk, the state tries to consolidate its revenues. But, put together, these decisions reduce overall economic activity. We are not witnessing panic, but a gradual withdrawal. The signs are already visible in the real economy. In 2025, 7,553 companies and PFAs entered insolvency, and over 74,000 companies disappeared from the economy through delisting, dissolution or suspension of activity. In December alone, almost 16,000 companies exited the market," Chiriac added.
Practically, for every 100 newly established companies, approximately 137 left the market, which no longer represents just an economic fluctuation, but a loss of entrepreneurial structure, she claims.
In parallel, inflation of almost 9.7% at the end of 2025 reduced the real incomes of the population.
"People have not necessarily become pessimistic, but they have become careful. They have postponed purchases, reduced spending and started waiting. The economy, when all economic actors simultaneously start waiting, slows down rapidly. In this context, another important signal appears: the country rating. International agencies do not only analyze current figures, but especially the capacity of an economy to sustain its financing over time," she added.
According to her, any deterioration in the perception of fiscal stability immediately translates into higher borrowing costs for the state. "And higher costs for the state inevitably mean greater pressure on the economy - through taxes, through reducing public investments or by postponing projects," notes Chiriac.
"The technical recession is therefore not the main danger. The real danger is the combination of the economic slowdown and fiscal measures taken too quickly. If the response to the slowdown is to increase fiscal pressure, the economy will not be stabilized, but contracted. A fragile economy is not treated by simultaneously braking consumption and investment. The Minister of Finance stated that we are not in a major crisis. He is correct. But economic history shows that major crises do not begin the moment they are declared. They are built slowly, through the accumulation of imbalances and the loss of confidence," she added.
In her opinion, the correction of the budget deficit is necessary, but the way in which it is carried out becomes essential. "A rapid fiscal adjustment in an already slowing economy risks reducing the very component that supports activity: demand. An economy can bear higher taxes. But it has a hard time bearing uncertainty and frequent changes in rules. Romania does not have just a budgetary problem today. It has a problem of economic confidence. And confidence is a real economic factor, even if it does not appear in a statistical table. When entrepreneurs postpone investments, when companies reduce their development plans and when the population changes its consumption behavior, the economy does not collapse suddenly, but slows down progressively," considers Cristina Chiriac.
Romania does not risk a financial crisis today, but it risks a crisis of economic confidence, and history shows that when the private sector loses confidence in the stability of the rules, the effects last for years, not quarters, she added.
"We are not in a deep crisis. But we are no longer in a healthy economy. We are at a sensitive point where public decisions and collective behavior will determine the evolution of the coming years. The real question is not whether Romania has entered a technical recession. The question is whether we will manage this stage as a temporary correction or whether, by accumulating caution and uncertainty, we will transform a slowdown into a crisis," she emphasized.
Romania's economy grew by 0.6% in 2025, but ended the year in technical recession, after Gross Domestic Product (GDP) was 1.9% lower in the fourth quarter compared to the third quarter of 2025, this being the second consecutive quarter of decline, according to signal data published on Friday by the National Institute of Statistics (INS).
In the third quarter, the Romanian economy recorded a decline of 0.2%, compared to the previous quarter.
Comentează