Romania’s current account deficit jumps 52 pct to EUR 8 bln in January-October

Romania’s current account balance of payment registered a deficit of EUR 7.99 billion in the first ten months of this year, up 52 percent year-on-year, while the foreign direct investment (FDI) increased by 9.7 percent to EUR 4.56 billion, according to the National Bank of Romania (BNR).

„The deficit on trade in goods widened by EUR 2.041 billion, the surplus on services income narrowed by EUR 196 million, the deficit of the primary income balance increased by EUR 170 million, and the surplus of the secondary income balance decreased by EUR 317 million,” the central bank said on Friday, in a press release.

The main source of the large external deficit is the negative trade balance.

“After a benign September, the trade balance returned to widening in October. It deteriorated by a staggering 42.5% compared to October 2017 and stood at EUR11.84 billion (or 5.9% of GDP for the January-October period), its highest since 2012,” ING Bank analysts said in a recent report.

“Apart from food items and raw materials where the pace of deterioration seems to have levelled off lately, the latter on the back of sharply lower oil prices, all other sectors posted wider deficits in October. The auto sector continues to drive the widening on the imports side, contributing 6.9 percentage points to the total 16.1% expansion,” they added.

Last year, the current account balance of payments registered a deficit of EUR 6.46 billion, or 3.4 percent of GDP.

On the other hand, non-residents’ direct investment in Romania totalled EUR 4.46 billion in the first ten months of 2018, compared with EUR 4.16 billion in January – October 2017, “of which equity (including estimated net reinvestment of earnings) amounted to EUR 3.589 billion and intercompany lending recorded a net value of EUR 972 million,” BNR indicates.