Romania’s CA deficit exceeds 8% of GDP in 12 months to October

Romania’s current account (CA) deficit rose by 32% y/y to EUR 28.4 billion in 12 months to October, driven by a wider deficit of trade in goods, a smaller surplus of trade in services, and stronger outflows generated by the direct and indirect investments made by foreign investors.

A small improvement in secondary transfers couldn’t change the big picture.

Based on the latest available GDP data, the CA deficit in the 12 months to October already hit 8.2% – up from 7.0% at the end of 2023. However, based on an estimated full 2024 GDP, the ratio may drop to 7.9%. Still, the gap will predictably exceed 8% of GDP by the end of the year.

Regarding the structure of the CA, the trade in goods is the main element in both static and dynamic terms: it measured EUR 32.7 billion in 12 months to October 2024 and increased by over EUR 4.0 billion over the past 12 months, making up the largest part of the EUR 6.3 billion deterioration of the CA balance.

Nevertheless, the trade in services has also deteriorated to a surplus of only EUR 11.6 billion in 12 months to October, EUR 2.2 billion less compared to the previous 12-month period.

Finally, the primary income balance’s deficit, showing the net volume of dividends and interest derived by foreign investors in Romania, increased by EUR 1.3 billion (+16% y/y) to EUR 9.5 billion in the 12 months to October.

(Photo source: Vlad Ispas/Dreamstime.com)