Romania’s economy will contract by 0.5% this year and will recover modestly by only 1.5% in 2027, according to the forecast published by Capital Economics. In addition, data on industrial production and retail trade indicate a further deterioration in economic activity in the second quarter. He believes that the main factor behind the economic slowdown is the fiscal consolidation needed to reduce the budget deficit. "A large part of this weakness was driven by the fiscal tightening needed to bring the budget deficit back on a sustainable path," the economist points out. However, Capital Economics warns that the economy will remain broadly stagnant in the coming period, as fiscal consolidation measures will continue.