Romania’s CA deficit hits 6.9% of GDP in 12-month to October

Romania’s current account deficit in the 12-month period to October has widened by 57% YoY, reversing a slight 7% YoY contraction posted one year earlier as of October 2020 in the context of subdued foreign trade and domestic demand.

Overall, the country’s external deficit deepened by 46% compared to two years earlier, to EUR 16.0 bln in the past 12 months to October 2021.

The CA deficit-to-GDP ratio thus hit 6.9% in the 12 months to October, sharply up from 4.7% in October 2020 and 5.0% in October 2019.

The deficit of the trade with goods was the main element of the CA balance, and it hit EUR 22.3 bln or a 9.5% of GDP deficit in the 12-month period to October - up from 8.6% in October 2020 and 8.0% in October 2019.

The net foreign direct investments (FDI) in the same 12-month period to October tripled compared to two years ago (in the 12 months ending October 2019) to EUR 7.76 bln (3.3% of GDP). But the “genuine” FDI, namely new equity, roughly halved compared to the pre-crisis 12-month period, to only EUR 1.64 bln in the 12-months to October 2021.

Most of the FDI in the past 12 months was reinvested earnings: EUR 4.39 bln (82% up from 2019). Another EUR 1.74 bln came as financing for the local subsidiaries of the foreign groups.

(Photo source: Nuthawut Somsuk/Dreamstime.com)