Romania’s CA posts EUR 695mn surplus in H1, equal to 0.5%-of-GDP

By bne IntelliNews August 13, 2013

Romania’s Jan-Jun current account balance turned to a surplus of EUR 695mn, or 0.5% of the projected full-year GDP, from a deficit of EUR 2.8bn a year earlier, the country’s central bank reported.

The shift was mainly driven by the steep 58% narrowing of the deficit in the country’s trade with goods – but strong contributions were made by i. rising exports of transport services and ii. lower outflows of incomes due to lower profits of FDI companies but also lower interest paid on public and private external debt.

Out of the rough EUR 3.5bn shift in the CA balance [from deficit to surplus], EUR 2bn was contributed by the narrowing deficit of goods trade, EUR 0.7bn by the rise in exports of transportation services and EUR 0.5bn by the lower outflows of incomes [FDI profits and interest on external debt].

Romania’s CA deficit in the past 12 months ending June accounted to EUR 1.675bn – or roughly 1.3% of the annual GDP. The CA gap narrowed slightly to 3.9% of GDP in 2012 after it has hovered around 4-4.5% in 2009-2011.

The first major expected CA balance correction took place in 2009 immediately after the recession begun. But the country is witnessing a second correction episode that was less expected. The CA balance improvement will predictably be supported by the inflow of funds from the EU budget in July and such inflows are actually expected to be the main driver for the country’s external balances on medium to long term.

On the downside, non-residents’ direct investment in Romania [net FDI, estimated] totalled only EUR 666mn as compared to EUR 826mn in January-June 2012. Of total FDI, intragroup loans amounted to EUR 570mn and equity stakes consolidated with the estimated net loss to EUR 96mn.

CA balance EUR mn 2012 2012 2012 2013 2013 2013  
Jan-May Inflows Outflows Balance Inflows Outflows Balance Balance
Current Account 29,847 32,628 -2,781 32,319 31,624 695 -125%
A. Goods and Services 25,939 29,458 -3,519 28,412 28,727 -315 -91%
a. Goods 22,386 25,884 -3,498 23,709 25,180 -1,471 -58%
b. Services 3,553 3,574 -21 4,703 3,547 1,156 -5605%
            - transport 1,022 653 369 1,619 619 1,000 171%
            - tourism and travel 518 628 -110 534 732 -198 80%
            - other services 2,013 2,293 -280 2,550 2,196 354 -226%
B. Incomes 654 1,914 -1,260 513 1,417 -904 -28%
C. Current Transfers 3,254 1,256 1,998 3,394 1,480 1,914 -4%
Source: BNR              

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