Romania’s CA deficit hits 7.9% of GDP in 12 months to August
<p>Romania’s current account (CA) deficit increased by 25% y/y to EUR 2.8 bln in August 2024 amid the general deterioration of the external balance across nearly all chapters except for the transfer of funds to non-government (households mainly), according to data published by the National bank of Romania (BNR).</p>

<p>The deficit in 12 months ending August widened as well to EUR 26.6 bln – or 7.9% of GDP, up from 7.1% of GDP 12 months earlier. The deterioration was, again, visible in all chapters (trade with goods, trade with services, and primary account balance – meaning the volume of net dividends and interest paid to foreign investors).</p>

<p>The trade deficit (goods and services) in 12 months to August 2024 increased by 25% y/y to EUR 19.2 bln, while the net outflows of dividends and interest to foreign investors also expanded by 25% y/y to EUR 9.6 bln.</p>

<p>The net transfers under the secondary income account (grants, transfers to households) increased by 31% y/y – but they are comparatively low, only EUR 2.2 bln in 12 months to August.</p>

<p>Romania’s CA balance is thus deteriorating, rather than narrowing as initially expected for this year – and this is because of the robust private consumption and significant fiscal slippage (only partly justified by the investments under the Resilience Facility scheme).</p>

<p>On the external balance side, S&amp;P, in its latest update on Romania’s sovereign rating on October 11, said it expected the current account deficit to widen from 7% of GDP in 2023 to 8.3% of GDP in 2024 and decline slower to 7.3% of GDP in 2027.</p>

<p><em>iulian@romania-insider.com</em></p>

<p><em>(Photo source: <a href="https://www.dreamstime.com" rel="noopener" target="_blank">Vlad Ispas/Dreamstime.com</a>)</em></p>