Romania’s C/A gap shrinks four times to 1.1% of GDP in 2013

By bne IntelliNews February 13, 2014

Romania’s current account deficit narrowed 74% y/y to EUR 1.5bn in 2013, the central bank reported. The C/A gap thus shrank four times to 1.1% of GDP from 4.4% of GDP in 2012. 

In the previous four years [2009-2012], the C/A gap hovered between 4.2%-4.5% of GDP. Before the balance of payment correction incurred in 2008-2009, the gap reached 13.4% of GDP in 2007 driven by strong inflows that spurred consumption and the real estate bubble.

In 2013, the C/A gap contraction was driven by the major 87% drop in the deficit of trade with goods and services. This was partly offset by the 45% larger deficit under the incomes account. Compared to the EUR 4.34bn narrowing of the C/A gap, the trade gap decreased by EUR 5.41bn. The outflows under the incomes account [debt service, dividends] increased by EUR 1.36bn, offsetting part of the improvement in the trade sector. The net inflows under current transfers sector [EU funds, wage remittances] increased by 8.7% y/y to EUR 287mn, contributing to a small extent to the external balance's improvement.

FDI HITS LARGEST LEVEL SINCE 2009

Non-residents’ direct investment in Romania increased by 26.8% y/y EUR 2.7bn. Out of them, equity stakes consolidated with the estimated net loss of the FDI companies amounted to EUR 1.78bn and intragroup loans to EUR 937mn.

C/A (EUR mn) 2005 2006 2007 2008 2009 2010 2011 2012 2013
                   
Current Account -6,884 -10,155 -16,713 -16,157 -4,915 -5,518 -5,924 -5,843 -1,505
% of GDP* -8.7% -10.4% -13.4% -11.6% -4.2% -4.4% -4.5% -4.4% -1.1%
A. Goods and Services -8,155 -11,755 -17,345 -18,450 -7,165 -7,196 -7,069 -6,250 -836
   Goods -7,806 -11,759 -17,822 -19,109 -6,871 -7,600 -7,409 -7,379 -3,423
   Services -349 4 477 659 -294 404 340 1,129 2,587
B. Incomes -2,326 -3,246 -4,152 -3,683 -1,902 -1,914 -2,207 -3,025 -4,388
C. Current Transfers 3,593 4,845 4,820 5,976 4,154 3,592 3,338 3,432 3,719
FDI 8,725 8,723 7,049 9,310 3,554 2,238 1,815 2,140 2,713
% of full-year GDP 11.0% 8.9% 5.7% 6.7% 3.0% 1.8% 1.4% 1.6% 1.9%
% of CA deficit 127% 86% 42% 58% 72% 41% 31% 37% 180%
Source: BNR, IntelliNews                  

 

CA balance EUR mn 2012 2012 2012 2013 2013 2013 Balance Balance
Jan-Dec Inflows Outflows Balance Inflows Outflows Balance y/y ch. y/y ch.
Current Account 60,659 66,502 -5,843 67,526 69,031 -1,505 -74% 4,338
A. Goods and Services 53,472 59,722 -6,250 59,890 60,726 -836 -87% 5,414
a. Goods 45,070 52,449 -7,379 49,563 52,986 -3,423 -54% 3,956
b. Services 8,402 7,273 1,129 10,327 7,740 2,587 129% 1,458
            - transport 2,487 1,325 1,162 3,644 1,434 2,210 90% 1,048
            - tourism and travel 1,142 1,429 -287 1,225 1,499 -274 -5% 13
            - other services 4,773 4,519 254 5,458 4,807 651 156% 397
B. Incomes 1,380 4,405 -3,025 1,308 5,696 -4,388 45% -1,363
C. Current Transfers 5,807 2,375 3,432 6,328 2,609 3,719 8% 287
Source: BNR                

 

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