Romania’s C/A gap narrows four times y/y in Jan-Nov 2013

By bne IntelliNews January 20, 2014

Romania’s current account deficit shrank to EUR 1.33bn [1% of GDP] in Jan-Nov last year, which is only a quarter of the deficit in the same period of 2012, the central bank announced. In the rolling 12 months ending in November, the gap was EUR 1.78bn, or 1.3% of GDP.

The rolling 12-month C/A gap has narrowed to only 1% of GDP [EUR 1.47bn] in October but picked up slightly a month later as the central bank and the government paid the interest on their loans from the IMF.

Our approximation of the November C/A data, based on unrevised Jan-Oct data, shows six times higher gap in the month, on the year. The external position deterioration was caused only by the incomes and current transfers sections, while the foreign trade section continued to improve. While the stronger current account outflows can be explained by the interest payment mentioned above, the thinner current transfers are unexpected at a time when the government announces stronger absorption of EU funds.

Speaking of the Jan-Nov data, Romania’s current account gap decreased by more than EUR 4bn y/y [3% of GDP]. The trade with goods and services shrank remarkably by more than EUR 5bn to only EUR 653mn in Jan-Nov last year from EUR 5.7bn the year before. Larger outflows on the side of incomes [up 42% y/y to EUR 3.93bn] were prompted by FDI companies’ returning to profit and by the external debt service. On the current transfers side, the inflows increased by only 9.3% y/y despite a stronger use of EU funds. Possibly the private transfers of remittances narrowed dragging down the total inflows.


Non-residents’ direct investment in Romania increased by 22.3% on low base to EUR 2,388mn in Jan-Nov. Of this, equity stakes consolidated with the estimated net loss amounting to EUR 1,347mn. Intragroup loans were EUR 1,041mn.

CA balance EUR mn 2012 2012 2012 2013 2013 2013 Balance Balance
Jan-Nov Inflows Outflows Balance Inflows Outflows Balance y/y  y/y in EUR mn
Current Account 56,004 61,392 -5,388 62,189 63,515 -1,326 -75% -4,062
A. Goods and Services 49,502 55,223 -5,721 55,269 55,922 -653 -89% -5,068
a. Goods 41,921 48,589 -6,668 45,705 48,804 -3,099 -54% -3,569
b. Services 7,581 6,634 947 9,564 7,118 2,446 158% -1,499
            - transport 2,268 1,219 1,049 3,346 1,356 1,990 90% -941
            - tourism and travel 1,044 1,312 -268 1,153 1,397 -244 -9% -24
            - other services 4,269 4,103 166 5,065 4,365 700 322% -534
B. Incomes 1,275 4,045 -2,770 1,207 5,134 -3,927 42% 1,157
C. Current Transfers 5,227 2,124 3,103 5,713 2,459 3,254 5% -151
Source: BNR                

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