Author Description

Romania’s economy withstood significant adverse shocks in the wake of Russia’s invasion of Ukraine and the ensuing energy crisis. Tackling high inflation is the immediate task for macroeconomic policy. Fiscal consolidation would complement restrictive monetary policy in keeping demand at sustainable levels. Greater tax revenues are needed to stabilise the public debt burden while funding priority spending – including on critical infrastructure, pensions, health care and the education system. Productivity growth is a powerful engine for lifting living standards but sustaining it will require a sound investment climate backed by strong competition, predictable policymaking, financial inclusion and effective controls against corruption. Romania’s Recovery and Resilience Plan is helping drive reform. More policy focus is needed on addressing disparate socio-economic outcomes within Romania and to lift employment among groups underrepresented in formal work, including women. Faster progress is also required to decarbonise the economy by 2050. Romania needs more renewable power and big energy savings to reduce fossil fuel use. Energy-efficient buildings, better transport systems and consistent price signals for abatement are also needed. Efficient and fair policies can limit costs from the net-zero transition, shield affected communities from hardship, and prepare people for changing climates. SPECIAL FEATURE: DECARBONISING ROMANIA'S ECONOMY