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|
|% 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|
|C. Current Transfers||3,593||4,845||4,820||5,976||4,154||3,592||3,338||3,432||3,719|
|% 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.|
|A. Goods and Services||53,472||59,722||-6,250||59,890||60,726||-836||-87%||5,414|
|- 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|
|C. Current Transfers||5,807||2,375||3,432||6,328||2,609||3,719||8%||287|
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