Romania’s CA gap in 12 months to November shrinks by 16% y/y to 7% of GDP

Romania’s current account (CA) deficit contracted by 16% y/y to EUR 21.9 billion in the 12 months to November 2023, according to data published by the National Bank of Romania. The CA gap to GDP ratio decreased to 7% (based on GDP data as of September 2023) from 9.6% calculated in similar terms as of November 2022.

The 20% contraction of the trade gap (goods and services) to EUR 14.9 billion was the main driver in the dynamics of Romania’s external position.

The primary incomes, primarily expressing the outflows of interest and dividends derived by foreign investors, moderated slightly by 6% to EUR 8.2 billion. The net inflows of secondary income transfers to households and the government diminished to EUR 1.2 billion in the 12 months leading up to November 2023.

The net FDI to Romania in the same 12-month period to November 2023 plunged by 26% y/y to EUR 6,787 million. The FDI to GDP ratio moderated to 2.2% of GDP from 3.4% one year earlier.

However, when it comes to genuine FDI, namely new equity contributions (as opposed to reinvested profits), the net inflows more than doubled to EUR 1.39 billion in the 12 months to November 2023, from EUR 516 million a year earlier. The smaller overall FDI inflows were thus the effect of fewer loans contracted by the FDI companies operating in Romania.

The volume of reinvested capital diminished slightly (-15% y/y) to EUR 5.2 billion.

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