Romania's Economic Confidence Index hits a new low since the pandemic in July
In July 2025, Romania's Economic Sentiment Indicator (ESI) experienced a significant decline, reaching 94.7 - the lowest level since January 2021 [1][3]. This drop was primarily driven by announced fiscal consolidation measures that have eroded confidence across most economic sectors, particularly retail trade, industry, construction, and consumer confidence [1].
The retail trade sector witnessed its confidence plunge to the lowest level since the end of the first wave of the COVID-19 pandemic, while industry and construction posted some of their weakest post-pandemic readings [1]. The consumer confidence balance also dropped to -31.4%, the lowest level since June 2022 [1].
Interestingly, the services sector remained positive but saw a weakening sentiment, marking the only sector out of the five monitored under ESI that did not post negative dynamics in July 2025 [1].
The announced fiscal consolidation package, which includes increases in VAT rates and excise duties starting from August 1, is largely attributed to the deterioration in consumer confidence [2]. This package is expected to erode future disposable incomes, further impacting consumer confidence.
The expiry of price caps on electricity prices in July 2025 also contributed to the overall decline in sentiment.
On a comparative note, Romania had been above the 100-point benchmark (indicating balanced expectations) for nearly two years but dropped below it starting in May 2025, aligning with a general EU-wide downward trend in economic sentiment [1]. In July 2025, Romania's ESI slipped just below the EU average level, marking a significant shift in sentiment relative to its previous position [1].
Compared to other EU member states, Romania has one of the most pessimistic balances of replies regarding the dynamics of the general economic situation, with only Greece and Hungary being more pessimistic [2]. The EU average for the balance of replies regarding the dynamics of the general economic situation was -28.6 in July 2025, with all member states in the negative (pessimistic) region [2].
Czechia and Lithuania were the most optimistic EU countries in July 2025, with balances of -11 [2]. However, Romania's ESI dropped below the EU average for the first time in three years in July 2025 [3].
This broad-based deterioration in sentiment has resulted in Romania’s ESI leading the country slightly below the European Union average for the first time after a sustained period of outperformance [1][3].
[1] Eurostat data [2] Erste Research [3] Various news sources
- The announced fiscal consolidation package, with its increases in VAT rates and excise duties, has led to concerns in the finance sector, as it is expected to erode future disposable incomes and further impact consumer confidence in the business sector.
- Romania's ESI dropped below the EU average for the first time in three years in July 2025, indicating a shift in sentiment relative to other European Union countries, which may have ramifications for the nation's finance and business industries.
