Romania’s current account deficit widens by 16 pct to EUR 7 bn in January-August; FDI up 2.8 pct

Sorin Melenciuc 14/10/2019 | 15:02

Romania’s current account balance of payment registered a deficit of EUR 7.08 billion in the first eight months of this year, up 16 percent compared to January-August 2018, while the foreign direct investment (FDI) rose by 2.8 percent to EUR 3.58 billion, according to the National Bank of Romania (BNR).

In January-August 2018, the current account balance of payment registered a deficit of EUR 6.1 billion.

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

„The deficit on trade in goods widened by EUR 2,081 million, the surplus on services income increased by EUR 357 million, the deficit of the primary income balance narrowed by EUR 963 million, and the surplus of the secondary income balance decreased by EUR 215 million,” the central bank said in a press release.

Experts expect Romania’s current account deficit to exceed 5 percent of GDP this year.

On the other hand, non-residents’ direct investment in Romania totalled EUR 3.58 billion in January-August 2019, compared with EUR 3.48 billion in the same period of 2018, “of which equity (including estimated net reinvestment of earnings) amounted to EUR 2,582 million and intercompany lending recorded a net value of EUR 999 million,” BNR indicates.

This increase was “determined by the improvement of the perception of investment risk (after the European Parliamentary elections) and of the potential of the Romanian economy in the medium term (considered higher than the potential of other countries in the region),” Banca Transilvania analysts indicated in a research note.

Last year, the current account balance of payment registered a deficit of EUR 9.42 billion – or 4.7 percent of GDP -, up 57.7 percent against 2017, while the FDI rose by 10 percent to EUR 5.27 billion.

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