Romania’s current account gap widens by 22% yoy in Jan-Oct 2019 to 4.2% of GDP

Romania’s current account deficit (CAD) has widened by 22% in January - October this year compared to the same period in 2018, to EUR 9.2 billion, according to the data of the National Bank of Romania (BNR).

The CAD to GDP ratio has thus deteriorated from 3.8% in the first ten months of 2018 to 4.2% in the same period of 2019.

In 2018, the country’s CAD hit EUR 9.3 bln, which accounted for 4.7% of the year's GDP.

BNR Governor Mugur Isarescu recently argued that the CA problem is in fact a fiscal deficit problem therefore one should not expect the exchange rate corrections to solve it - but rather structural reforms and fiscal consolidation.

The main cause of the CAD is the net import of goods. According to BNR (which uses a methodology different from that used by the statistics office INS), the balance of goods recorded a deficit of EUR 14.1 bln in January-October, up EUR 2.5 bln from the same period last year.

The balance of services registered a larger surplus of EUR 278 mln, the balance of primary incomes (generated by transfer of labour and capital) registered a smaller deficit of EUR 562 mln, and the balance of secondary incomes (transfers) registered a smaller of EUR 10 mln.

The current account deficit (CAD) is a measure of how much the country spends abroad on goods, services and labour - in net terms and net of transfers (from European Union budget, for instance).

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