Romania’s 12-month current account deficit stabilises at 4.9% of GDP

Romania’s current account (CA) deficit widened by 16% in January-August this year compared to the same period last year, to EUR 7.1 bln.

In August alone, the CA gap narrowed by 21% compared to the same month last year, to EUR 1.1 bln.

The rolling 12-month CA deficit calculated at the end of August was EUR 10.3 bln, down from EUR 10.6 bln one month earlier. It was the fifth month when the trend CA gap stagnated just over EUR 10 bln, or 4.9% of the full year’s projected GDP. Before the 2008-2009 recession, the CA gap neared EUR 20 bln for a GDP smaller than EUR 150 bln - versus EUR 210 mln this year.

The country’s external debt to GDP ratio remained roughly the same, around 50%.

Speaking of January-August data, the net import of goods increased by nearly one quarter (+23.6%) adding more than EUR 2 bln to the trade deficit (and trade gap). The surplus of services offset more than half of this (EUR 5.9 bln, +6.5% year-on-year).

Primary incomes (flows generated by labour and investments across countries) generated a much smaller gap this year mainly because the outflows dropped from nearly EUR 7 bln to some EUR 6.2 bln. Overall, including slightly stronger inflows, the primary account remains in the deficit area (-EUR 3.2 bln) but a deficit that was EUR 1 bln smaller than last year. The surplus of secondary incomes, including transfers (to government and households) weakened to less than EUR 1.2 bln.

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