Romania’s current account surplus increased by 45% y/y to EUR 388mn in January 2014, the central bank announced. This accounts for nearly 0.3% of the projected full-year GDP.

The current account balance might have remained in the surplus area at the end of February as well when the Treasury reported significant transfers from the EU budget. But it is expected to return in the deficit region for the full year – most likely widening from the 1.1%-of-GDP gap reached in 2013. A certain revival in consumption and stronger investments are believed to contribute to a wider current account gap, while the transfers from the EU budget would compensate part of the supplementary deficit.

The current account deficit in the rolling 12 months ending in January was EUR 1.39bn – equivalent to 1% of the annual GDP, down from 1.1% calculated a month earlier. Romania’s C/A gap has narrowed four times on the year to EUR 1.5% [1.1% of GDP] in 2013, in a second correction episode after the initial major balance of payment correction in 2009. The gap has hovered around 4.2-4.5% of GDP in 2009-2012 but shrank significantly in 2013 on combined effects of i. strong external demand and exports and ii. subdued domestic demand.

In January alone, Romania’s current account surplus was expanded mainly by the positive performance of the trade with goods and services. The trade surplus expanded from a mere EUR 2mn in January 2013 to EUR 114mn. The balances on the incomes and current transfers have changed rather marginally, with the net incomes outflows [debt service, dividends] up 2% y/y to EUR 291mn and the net transfers inflows up 3% y/y at EUR 565mn.

FDI UP 8% Y/Y TO EUR 244MN. Non-residents’ direct investment in Romania increased by 8% y/y to EUR 244mn in January. Out of this, equity stakes contributions consolidated with the estimated net loss of FDI companies amounted to EUR 119mn, while the intragroup loans were EUR 125mn.