Romania’s current account gap widens by 18% in Jan-Mar

Romania’s current account (CA) deficit increased in the first three months of this year by 18% year-on-year to EUR 1.21 billion, or some 0.6% of the gross domestic product (GDP) estimated for the whole year, according to data released by the central bank - BNR.

Seasonally, the CA deficit is smaller in the first quarter of the year: in 2018, it accounted for only 11% of the full year gap (which rose nine-fold in the following three quarters).

The external balance slippage is among the main threats to the country’s macroeconomic stability at this moment.

The Government expects to contain the CA gap to 3.3% of GDP this year without making use of currency depreciation (according to the Spring Forecast). However, independent analysts see the CA widening as imminent, yet not necessarily dramatic compared to the record readings (12%-14% of GDP) seen before 2008.

The balance of goods recorded a deficit of EUR 3.5 billion, 33.3% higher than last year and the balance of services registered a surplus of EUR 1.7 billion (-5.9% year-on-year). The primary income account, which balances the dividend and interest repatriated by foreign investors on the one hand with the wage remittances sent back by Romanians working abroad recorded a surplus of EUR 91 million, compared with a deficit of EUR 589 million last year, because of smaller dividends and interest repatriated by investors. At the same time, the balance of secondary revenues (mostly including transfers from the European Union budget) recorded a surplus of EUR 480 million, 42% more than last year.

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