Smaller trade gap in Romania surfaces in slight narrowing of its CA deficit
Romania's current account (CA) deficit increased by 16.5% y/y to EUR 24.44 bln in 12 months to April, which accounts for 8.3% of the latest available annual GDP data (as of the end of March), according to data provided by the National bank…
iulian ernst · Journalist
· Updated · 2 min read
Romania's current account (CA) deficit increased by 16.5% y/y to EUR 24.44 bln in 12 months to April, which accounts for 8.3% of the latest available annual GDP data (as of the end of March), according to data provided by the National bank of Romania (BNR).
The CA gap was 8.6% of GDP as of April 2022. In absolute terms, the country's rolling 12-month CA deficit peaked at EUR 26.7 bln 99.3% of GDP) at the end of 2022 to further narrow, driven by smaller deficits in the trade with goods.
On a year-on-year basis, the improvement in Romania's CA gap was caused by a stronger surplus in the trade with services (+45% y/y to EUR 14.43 bln in the 12-month period to April) while the deficit in the trade with goods increased as well but only by 23% y/y to EUR 31.6 bln.
The deficit in the primary income balance (dividends, interest, wages) has widened by 38% y/y to EUR 9 bln, and the surplus in the secondary income balance rose by 34% y/y but on a rather low base to EUR 1.76 bln.
But from a shorter-term perspective, the net import of goods has peaked during 2022 to ease in 2023.
A combination of prices and frontloading in the fuel market caused by the war in Ukraine contributed to and will possibly impact the country's CA balance in the year to come.
The deficit in the non-energy trade with goods remained steady y/y in January-April in nominal terms – which indicates some improvements in relative (% of GDP) terms. But it's not necessarily good news since this reflects subdued industrial activity and volatile trade with grains rather than structural changes.
When it comes to the foreign direct investments (FDI) in Romania, the rolling 12-month figure rose to EUR 9.3 bln at the end of April. Out of this, however, EUR 7.46 bln was FDI companies' re-invested earnings, and EUR 1.88 bln was FDI companies' borrowing from parent groups. The flow of equity investments remains, in the 12-month period to April, towards abroad due to Romgaz's investment in the Neptun Deep offshore project operated through a foreign subsidiary of ExxonMobil.
(Photo source: Antonyesse/Dreamstime.com)
