IMF Signals Slower Global Growth Amid Romanian Fiscal Concerns
IMF projects slower global growth while EU Commissioner Dombrovskis warns Romania on fiscal deficits impacting economic prospects and EU funding.
- • IMF projects global growth slowing from 3.3% in 2024 to 3.1% in 2026 with advanced economies at 1.5%.
- • Inflation expected to decline globally but remains elevated in the U.S., with downside risks due to uncertainty and protectionism.
- • Romania’s budget deficit hit 9.3% of GDP in 2024, highest in the EU; expected not to exceed 8.4% in 2025.
- • European Commission will assess Romania’s fiscal compliance by November to determine EU fund eligibility; EU support tied to the National Recovery and Resilience Plan.
Key details
The International Monetary Fund's October 2025 World Economic Outlook paints a cautious picture for global economic growth, expecting a slowdown from 3.3% in 2024 to 3.2% in 2025 and further down to 3.1% in 2026. Advanced economies are projected to grow around 1.5%, while emerging markets will see growth just above 4%. Inflation trends are favorable globally but remain elevated in the U.S., with downside risks including prolonged uncertainty and protectionism. Policymakers are urged to institute credible, transparent policies to restore confidence.
In Europe, the fiscal sustainability challenge is exemplified by Romania. European Commissioner Valdis Dombrovskis highlighted during a visit to Bucharest that Romania's budget deficit reached 9.3% of GDP last year, the highest in the EU. The European Commission expects the deficit not to exceed 8.4% in 2025. Dombrovskis emphasized that Romania must adopt bold fiscal measures to mitigate vulnerabilities and comply with EU fiscal rules to avoid suspension of vital EU funds. The National Recovery and Resilience Plan remains a cornerstone for Romania’s economic prospects, with significant EU support expected through cohesion funds and other programs. Establishing stable and transparent frameworks for deploying these resources is essential, according to Dombrovskis.
These intertwined global and regional fiscal challenges underscore the delicate balance between fostering economic growth and maintaining fiscal health amid a complex economic landscape marked by cautious optimism and significant risks.