Romania’s current account balance posted a EUR 160mn deficit in Jan-Aug, 26 times smaller than a year earlier and only 0.1% of the full-year GDP projection, the central bank announced. The CA gap was still in the surplus area in Jan-Jul, when the balance was a positive EUR 489mn.

The CA gap must have been EUR 649mn in August alone – based on unrevised Jan-Jul data, and this was still slightly more than half of the EUR 1,189mn deficit in August 2012.

Nonetheless, the central bank has adjusted significantly the past data on the CA balance. Romania’s 2012 CA gap was adjusted to EUR 5,838mn [4.4% of GDP] from EUR 5,151mn [3.9% of GDP] still reported a month earlier. The backward adjustment might have impacted Jan-Jul data also and our calculations on the August CA deficit based on unrevised data mentioned above, might not be therefore precise.

The CA narrowing in Jan-Aug was mainly driven by the shrinking deficit of trade with goods – while the surplus in the trade with services also contributed. The deficit in the trade with goods more than halved to EUR 2.27bn. The surplus in the trade with services tripled to EUR 1.77bn – but the absolute growth was only EUR 1.2bn – compared to a EUR 2.6bn improvement [decline in deficit] in the balance of trade with goods.

The outflows under Incomes [external debt service, dividends repatriated by FDI investors] diminished slightly by 17% y/y to EUR 2.0bn. On the downside, the surplus in the Current Transfer area [EU funds absorption, wage remittances] also declined by 7% y/y to EUR 2.3bn.

Non-residents’ direct investment in Romania totalled EUR 1.12bn (down 35.9% y/y), of which intragroup loans amounted to EUR 339mn and equity stakes consolidated with the estimated net loss to EUR 779mn.