ZF: Flow of foreign capital to Romania turned negative in 2021

Interpreting data released by the Trade Registry, local Ziarul Financiar (ZF) daily concluded that the flow of foreign capital injected in Romanian companies turned negative for the first time in the past three decades - since the fall of communism.

The foreign capital stock has indeed slightly declined during 2021, from EUR 49.6 bln to EUR 49.5 bln. The change is, however, of the same magnitude as the exchange rate effects.

The pattern of the monthly dynamics, with a slight drop in the stock of foreign equity in April and to a smaller extent in July, indicate that the decline was due to capitalisation of losses incurred last year - after the foreign companies have on an aggregated basis increased their capital to weather the effects of the crisis.

The number of companies with foreign capital participation has increased constantly through 2021.

The decline in the flow of foreign capital to Romanian companies is a medium-term pattern visible since before the pandemic - and this pattern is consistent with the figures from the National Bank of Romania (BNR). However, BNR data indicate that the equity FDI in the 12-month period to November indicate net foreign equity investments of nearly EUR 1.7 bln.

(Photo source: Dreamstime.com)