Romania’s CA deficit widens by 21% y/y to EUR 26.5 bln in 12 months to July
<p>Romania’s current account (CA) deficit widened by 21% y/y to EUR 26.5 billion in 12 months to July, after two record monthly deficits of over EUR 3 bln in June and July, according to data published by the central bank BNR.</p>

<p>Instead of decreasing or at least remaining constant (at 7%) as expected by the state forecasting body CNP, Romania’s CA-to-GDP ratio increased to 7.9% in 12 months to July, from 7.0% in 2023 and 7.2% in 12 months to July 2023.&nbsp;</p>

<p>Disappointing nominal GDP advance contributed to the higher ratio – but the trade deficit slippage (for both goods and services) and&nbsp;the strong outflows generated by the foreign financial and direct investments (dividends and interest) were the main drivers behind the surprisingly high CA-to-GDP ratio. The inflow of secondary incomes partly offset the wider deficits in the first two CA elements (trade and primary incomes).</p>

<p>Thus, the trade with goods and services posted a deficit of EUR 19.3 bln in 12 months to July, EUR 3.7 bln (24%) more compared to the previous 12-month period. The substantial net export of services eroded by 15% y/y to EUR 12.2 bln.&nbsp;</p>

<p>Romanians spent EUR 8.85 bln (8.6% more y/y) on traveling abroad, while the incomes from tourism dropped by 8.8% y/y to EUR 4.4 bln in the 12 months to July.</p>

<p>The net outflows under the primary income account (net interest and dividends paid to foreign investors partly offset by the formal wage remittances) surged by 21% y/y to EUR 9.25 bln in 12 months to July.&nbsp;</p>

<p>The dividends paid to FDI investors rose by 8.9% y/y to EUR 12 bln, and the interest paid to financial investors soared by 43% y/y to EUR 3.65 bln. The inflows under the two accounts have not exceeded EUR 600 mln.</p>

<p>Under the secondary income account (transfers to government and households), Romania posted a EUR 2.1 bln surplus, 52% larger compared to the previous 12-month period – still insufficient to offset a significant part of the deficits generated by the trade and primary income account.</p>

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

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