Romania’s current account deficit (CAD) increased significantly to EUR 114 million in January 2019, from a moderate EUR 7 million gap in the same month last year, according to Romania's National Bank (BNR).

Rising domestic demand remains the primary driver, while the local currency weakening already seen in January has not determined lower imports.

The deficit and its deterioration were both, almost entirely, the result of the net import of goods and, to a much lesser extent, of tourism services. However, this did not come as a surprise, after the foreign trade figures reported last week showed 62% year-on-year wider trade gap namely EUR 1.260 billion.

The only other section of the current account posting a deficit in January was that of the trade with tourism services where the net imports increased by 29% year-on-year to EUR 106 million. Notably, the gross import of tourism services, representing the money spent by Romania tourists on holidays abroad, rose by 12% year-on-year to EUR 285 million.

Romania’s CAD widened by 58% year-on-year to 4.7% of GDP (EUR 9.4 billion) in 2018.

In its Report on Romania, issued on March 15, rating agency S&P forecast that the country’s CAD will remain around 4.5% of GDP on average through 2022. Positively, S&P observes that the funding of the CAD stems largely from stable, non-debt-creating inflows.

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editor@romania-insider.com