Key Challenges

Long list of persistent challenges
Romania continues to struggle with political instability, a lack of judicial independence and integrity, high corruption, economic stagnation, and social outmigration in the face of the COVID-19 pandemic, which shows few signs of retreat within the country.
Progress in area of
judicial integrity
Concerning judicial independence and integrity, Romania has made some important progress during the period under review in reversing the damage of the 2017–2019 judicial reform packages. This has advanced efforts to lift the European Commission’s Cooperation and Verification Mechanism. However, structural challenges continue to hinder judicial integrity and independence, and there is widespread corruption at the local level. In addition, Romanians continue to perceive the government as highly corrupt and ineffective, which erodes trust and undermines the government’s policy agenda.
Increasing reliance on misinformation
Distrust of government has marked Romanians’ response to official efforts to control the COVID-19 pandemic through restrictions on social gatherings, mandatory quarantines and vaccination. Protests across the country early in the pandemic indicated widespread skepticism of the official narrative, which hindered vaccination efforts. Instead of official information, Romanians increasingly rely on misinformation and “fake news” that downplay the effects of the virus, and cast doubt on the efficacy and safety of vaccines. As the Omicron variant takes hold across Europe, Romania will have to build enough public trust to encourage widespread vaccine adoption in order to avoid the worst national health catastrophe of the pandemic yet. With just 40% of the population fully vaccinated and vaccine uptake slowing, the government faces an uphill battle.
Lax pandemic controls allowed rapid rebound; labor market weaknesses persist
Economically, Romania’s more lax approach to controlling the pandemic means that the economy was able to rebound quickly after a sharp decrease in 2020, growing 7% in 2021, about 3% growth compared to 2019 levels. The European Commission anticipates roughly 5% economic growth in 2022 and 2023, which is strong, with unemployment remaining stable at about 5% over the same timeframe. However, deficit reduction efforts have failed. In 2020, Romania posted a budget deficit of just under 10%, up from 4.4% the previous year. While 2020 was undoubtedly a difficult year for governments around the world in terms of fiscal consolidation, the European Union’s 27 country average was below 7%. Deficit reduction remains key to improving Romania’s economic rating and investment environment. As a final economic note, emigration, particularly that of qualified and educated individuals including healthcare workers, continues to hinder economic advancement and places additional pressures on a faltering healthcare system in the midst of the pandemic. Labor market conditions remain tight, with labor and skills shortages persisting from 2020 because of the exacerbated decline in the labor force. Low labor force participation remains a concern, despite the minor success of labor activation policies and adult learning programs, largely due to emigration.

Party Polarization

Polarization impeding governance; mistrust between main parties
Party polarization is an impediment to effective governance in Romania. While the electoral system necessitates the formation of party coalitions in order to form majority governments, which can promote cooperation between parties, in 2020 and 2021, government coalitions proved to be fragile. Polarization continues to pit the Social Democratic Party (PSD), and the Party of the Alliance of Liberals and Democrats (ALDE) against the center-right National Liberal Party (PNL). While the PNL, propped up by the USR PLUS and the Democratic Alliance of Hungarians (UDMR/RMDSZ), moved into government after defeating the PSD in the December 2020 elections, this coalition soon collapsed when the USR PLUS pulled its support in October 2021, alleging that the PNL was advancing a reform initiative that would leverage its position in the upcoming local elections. In the 2020 legislative elections, a newly established nationalist, right-wing populist party, the Alliance for the Union of Romanians (AUR), won 9% of the votes for both chambers of parliament. Adopting antagonistic rhetoric and campaign strategy, AUR has further contributed to polarization. Mistrust between the political parties impedes effective and sustainable coalitions, leads to finger-pointing, and is a distraction for both policymakers and the public from advancing meaningful governance initiatives. (Score: 4)
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