Romania’s CA gap hits 8.6% of GDP in 12 months to May

Romania’s current account (CA) deficit reached EUR 21.3 bln in the 12 months to May, or 8.6% of GDP, according to data published by the National Bank of Romania(BNR) and based on the latest available GDP figures - as of March 2022.

The comparable ratio calculated for May 2021 was 6.1%. The monthly CA deficits exceeded EUR 2 bln since February, and the EUR 2.7 bln gap in May accounted for a 72% YoY annual increase.

The deficit in the balance of trade with goods leapt up from EUR 19.9 bln in 12 months to May 2021 to EUR 26.6 bln one year later - a EUR 6.7 bln that explains most of the EUR 7.9 bln increase in the 12-month CA gap over the past 12 months.

The second largest impact on the CA gap comes from the primary incomes balance, where the dividends and interest gained by foreign investors on a combination of high profits reported by the FDI companies and rising interest rates resulted in a supplementary deficit of some EUR 1.25 bln: EUR 5.75 bln in 12 months to May 2022, compared to EUR 4.50 bln in May 2021.

The surplus of the secondary income balance has deteriorated from EUR 1.6 bln to EUR 1.0 bln.

Notably, the transfers under the Resilience Facility are reported in the BoP under the capital account and not as transfers under the secondary income balance - meaning that the deficit may further widen over the coming years.

(Photo: Octav Ganea/ Inquam Photos)