Romania’s CA balance remained marginally in the surplus area for the period of Jan-Apr despite the small deficit in April, the central bank announced. The trade of services has notably contributed, along with the trade of goods, to the overall CA performance that remained sound in April. 

The CA balance moved from a deficit of more than EUR 1.5bn in Jan-Apr last year to a small surplus of EUR 54mn in Jan-Apr 2013. Nonetheless, based on [unrevised] Q1 CA data, we have calculated that the balance dropped in the deficit area in April alone, when it posted a negative value of EUR 15mn – nonetheless much smaller than the EUR 738mn deficit in April last year.

Romania's CA deficit in the rolling 12 months thus narrowed to EUR 3.56bn at the end of April, equivalent to 2.7% of the GDP projected for this year, according to our calculations. The country's CA gap shrank to 3.9% of GDP in 2012 from 4.5% in 2011. Even if the trade's contribution to the CA narrowing eases in the coming months, the better absorption of EU funds might, on the opposite, strengthen its contribution.

In April alone, the foreign trade balance improved notably on the services side, with an impact on whole trade balance [goods and services]. The performance, however, deteriorated on the incomes and current transfers sides. Our calculations are based on unrevised Q1 data [thus only approximations], but the trade with services posted an impressive EUR 568mn surplus this April alone – compared to a EUR 51mn surplus in April last year. The surplus of trade with services was EUR 153mn in full Q1 and EUR 578mn in the whole 2012. The net export of services seems to have turned into a robust and stable positive contributor to the country’s CA balance.

The robust surplus in the services area adds to the country’s performance in the trade with goods, where exports surged by 15.5% y/y in April. Even if the imports also increased [by 5% y/y], the trade deficit has narrowed 45% y/y to EUR 404mn in April alone. In Jan-Apr, the trade deficit shrank 50% y/y to EUR 956mn.

The combined balance of trade with goods and services moved in the surplus area in April for the first time in the past decade. The performance is probably not sustainable, but marks a certain improvement in the country’s structure of trade that will possibly continue with the expansion of automobile producer Ford .

The performance of the other two sections of the CA – incomes and current transfers, deteriorated in April. Namely the net outflows under the incomes account increased sharply by 71% y/y to EUR 353mn [more than the EUR 321mn in Q1], while the net inflows under current transfers shrank 33% y/y to EUR 174mn [less than the EUR 789mn in Q1].