Net FDI to Romania halves y/y in January

The net foreign direct investments (FDI) to Romania contracted by 53% y/y to EUR 538 million in January, resulting in a total of EUR 5.1 billion (-28% y/y) in 12 months to the end of the month, according to data published by the central bank BNR.

Out of the FDI in the 12 months to January, only EUR 349 was new equity, with the bulk of it being formed by reinvested earnings (EUR 4.0 billion) and partly loans to FDI companies from parent groups (EUR 753 million).

The stock of FDI in Romania (EUR 125 billion) is already generating significant dividends and interest for foreign investors, part of which is returning as reinvested earnings.

In the 12 months to January, the volume of interest and dividends generated for foreign investors accounted for EUR 11.7 billion (3.3% of GDP) and roughly a third of it (EUR 4 billion) has returned as reinvested earnings. The reinvestment ratio dropped from 42% in 2023 and 50% in 2022.

At only 1.4% of GDP in 12 months to January, the inflows of FDI to Romania cover only a small part of the 8.3%-of-GDP current account deficit, and this is not likely to improve significantly in the future.

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