Central banker proclaims Romania’s ‘economic miracle’

Romania’s GDP per capita, measured in purchasing power parity relative to the EU average, has surged from 25% in the early 1990s to nearly 80% today, catching up with its Central and Eastern European (CEE) peers Poland, Slovakia, and Hungary, according to a new analysis.

In the last three decades, Romania has experienced an “economic miracle,” achieving remarkable economic growth and transforming into a medium-developed economy, National Bank of Romania (BNR) board member’s Csaba Balint wrote in an article entitled “Romania’s economic ‘Golden Age’ – public perception versus the reality in numbers.”

Moreover, Romania’s workforce is now 3 times more productive than in 2000, Balint said. Romania now has one of the most accelerated convergence rates in Europe after nearly a century and a half of underdevelopment and challenges following the transition from a centralised to a market economy, he added, in an analysis published on opiniibnr.ro.

Regional inequalities stark

The analysis came as a counterpoint to the political crisis in Romania, a country that has generally stayed on the Western path since the fall of communism, prompted by the shock victory of far-right, Kremlin-backed newcomer Calin Georgescu on Sunday, 24 November.

“Economically and in terms of living standards, we are closer to the West than we have ever been,” the BNR official said, adding, however, that regional disparities and questions over the sustainability of this trajectory remain.

The nuances of Romania’s economic transformation reveal stark regional disparities. Some counties, such as Brasov, central Romania, Timis, west Romania, and Cluj Napoca, north-west Romania have GDP per capita figures up to 145% of the national average. Meanwhile, less developed areas struggle at just 44–48% of the average national GDP, while in Bucharest it is 280%. 

“Although GDP is a commonly used measure of progress, it doesn’t capture the full extent of well-being or wealth accumulation,” Balint wrote, noting that Romania lags its regional peers for net financial wealth per capita.

Key role of European integration

A key factor in Romania’s accelerated convergence is its integration into the EU, which has provided access to structural funds, open markets, and investment opportunities while enforcing democratic standards and structural reforms. This has also allowed Romania to modernise its infrastructure, adopt Western economic models, and participate in global value chains, Balint writes. 

“European funds have supported essential reforms and investments, directly contributing to growth,” according to Balint, who added that foreign direct investment, technology and new managerial expertise have also increased labour productivity.

Tough to avoid ‘middle-income trap’

Despite rapid progress, sustaining this growth remains a challenge as Romania nears the “middle-income trap”, which Balint calls a common hurdle for emerging economies.

The path from 75% to 100% of the average EU GDP per capita demands constant innovation, technological advancement, and robust institutions. Labour market dynamics also present a challenge, according to the central banker.

Romania now faces reduced population growth, emigration, and a shrinking pool of skilled workers. Coupled with rising public debt: up from 12% of GDP in 2007 to nearly 52% in 2024, the country’s fiscal policy must now be carefully managed to ensure stability, Balint concluded.