Romania’s current account deficit hits 6.9% of GDP in 12 months to October

Romania’s current account deficit hits 6.9% of GDP in 12 months to October
By Iulian Ernst in Bucharest December 15, 2021

Romania’s current account deficit in the 12-month period to October has widened by 57% y/y, reversing a small 7% y/y contraction posted for the comparable period to October 2020.

Overall, the country’s external deficit in the 12-month period to October deepened by 46% compared to two years earlier, to €16.0bn.

The current account deficit-to-GDP ratio thus hit 6.9% in the 12-month period, sharply up from 4.7% in the 12 months to October 2020 and 5.0% in the period to October 2019.

The deficit of the trade with goods was the main element of the current account balance and it hit €22.3bn or a 9.5% of GDP deficit in the 12-month period to October – up from 8.6% in October 2020 and 8.0% in October 2019. 

The net foreign direct investments (FDI) in the same 12-month period to October tripled compared to two years ago (in the 12-month period ending October 2019) to €7.76bn (3.3% of GDP).

But the equity FDI roughly halved compared to the pre-crisis 12-month period, to only €1.64bn in the 12-months to October 2021.

Most of the FDI in the past 12 months was reinvested earnings: €4.39bn (82% up from 2019). Another €1.74bn came as financing for the local subsidiaries of the foreign groups. 

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