Foreign investors “return” to Romania in Jan-Apr after crisis

The net foreign investments in Romania over the first four months of this year (January-April) were EUR 2.31 bln - compared to EUR 59 mln outflows in the same period of 2020, according to data published by the National Bank of Romania (BNR).

In absolute terms, at some 1% of GDP, this is not an impressive figure.

Looking deeper into the structure of the FDI, the picture looks even less impressive: EUR 1.63 bln worth of January-April FDI consists in “reinvested profit” (partly deferred from last year) and only EUR 579 mln (EUR 2 mln in the same period of 2020) consists in equity, other than reinvested earnings.

Some EUR 114 mln was borrowed by local subsidiaries of foreign groups, which in the same period last year returned to their parent groups EUR 304 mln worth of intra-group loans.

In March alone, FDI inflows account for EUR 1.2 bln, compared to EUR 1.1 bln outflows in the same month last year.

The net FDI in Romania dropped to EUR 1.86 bln (0.8% of GDP) in 2020, down from EUR 4.85-4.95 bln in 2018-2019. This was the overlapping result of over EUR 3 bln profits retained by FDI companies (more than in 2018 or 2019), offset by over EUR 2 bln loans “returned” to their foreign parent groups - after a roughly flat balance of debts between FDI subsidiaries and parent groups over the previous couple of years.

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