Surging imports and profit repatriation push up Romania’s current account defi

Romania’s current account deficit went up by almost EUR 2.9 billion in April to reach EUR 7. 57 bln in the first four months of 2022. The number is 84% higher compared with the first four months of 2021.

There are at least two factors behind the widening of the current account gap: the surge in imports, which outpaced the exports, and the dividends cashed in by foreign groups from their Romanian subsidiaries.

The deficit in the trade with goods climbed to EUR 9.3 bln in the first four months (EUR 2.67 bln in April alone), up from EUR 6.72 bln in the same period of 2021.

Meanwhile, the surplus on the services side saw a slower increase, from EUR 2.82 bln to EUR 3.17 bln.

The biggest change came from the primary income balance, which reflects the cash flows related to labor revenues and investment incomes (including dividends).

The primary income deficit more than tripled in the first four months of this year to EUR 1.54 bln (up from EUR 0.42 bln in the same period of 2021). The secondary income balance, which reflects mainly the private transfers (remittances), showed a surplus of EUR 116 mln, down from EUR 200 mln in January-April 2021.

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