Romania’s current account deficit widens by a third in January-February

Romania’s current account (CA) deficit deepened by 34% to EUR 568 million in January-February, compared to the same period last year.

The net imports of goods and tourism services remain the main drivers for the CA’s widening, while the inflows of primary incomes (mostly wages earned abroad, in the case of Romania) and secondary incomes (transfers from the European Union budget) sweetened the deficit to some extent.

Thus, the net import of goods soared by 41% year-on-year to EUR 2.3 billion in the first two months of the year. The net import of tourism and travel services increased as well, by 40% year-on-year to EUR 256 million as the gross import (purchase) of such services increased by 18% to EUR 576 million. The inflows of secondary incomes (transfers from the EU budget) more than doubled to EUR 1.0 billion while the inflows of primary incomes increased as well (by 16% year-on-year) to EUR 1.5 billion.

The foreign direct investments were reported at EUR 1 billion in January-February, up 47% year-on-year. Out of this, EUR 704 million was equity plus re-invested earnings, therefore more granular data is needed in order to conclude investors’ positive sentiment (since the large part of FDI might, in fact, be re-invested earnings - -profits reported by FDI companies not immediately repatriated, as opposed to new capital inflows that demonstrate active investment actions).

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