Romania’s current account deficit in 12 months to August drops to 7.0% of GDP

Romania’s current account deficit in 12 months to August drops to 7.0% of GDP
Romania's current account balance on a 12-month rolling basis / bne IntelliNews
By bne IntelliNews October 17, 2023

Romania’s current account (chart) deficit in the 12 months to August 2023 narrowed by 16% year on year to €21.30bn thanks to the sharp 37% plunge in August (to €1.91bn), the data published by the National Bank of Romania (BNR) show.

It is an improvement driven by low base effects, but the underlying structural elements that undermine Romania’s external balance have not changed. On the upside, the current account (CA) gap financing has not been under pressure recently. 

Given the high nominal advance of the GDP (+16.7% y/y in euros, as of the end of June), the CA gap to GDP ratio dropped to 7% at the end of August from 9.7% one year earlier. However, the CA gap measured only 6.6% of GDP in August 2021, before the war in Ukraine pushed up the energy prices. During the Covid-19 the gap narrowed to 4.5% while before the lockdown in August 2019, it was 5.0% – a level that is still 2pp below the current one. 

The CA deficit will remain between 6%-7% of GDP out to 2026, according to the S&P’s macroeconomic scenario published on October 13. Importantly, the rating agency underlines, non-debt-creating inflows in the form of EU funds and net foreign direct investments (FDI) will continue to fund a significant share of Romania's external deficit (about 60% on average over the next three years) and the central bank's international reserves. 

EUR bn / % of GDP Aug-19 Aug-20 Aug-21 Aug-22 Aug-23
CA balance 10.643 10.044 15.142 25.232 21.298
CA balance 5.0% 4.5% 6.6% 9.7% 7.0%
Trade balance 8.958 9.37 12.188 17.762 14.731
Trade balance 4.2% 4.2% 5.3% 6.8% 4.8%
Prim+Sec Acc balance 0.8% 0.3% 1.3% 2.9% 2.2%
           
FDI gross infl. 6.148 2.290  5.944 11.871 7.699
FDI gross. infl 2.9% 1.0% 2.6% 4.6% 2.5%
Reinvested prof. 1.985 3.081 4.529 6.434 4.912
Reinvested prof. 0.9% 1.4% 2.0% 2.5% 1.6%
source: BNR          

Related Content

Bucharest summons Russian chargé d'affaires after drone debris hits Romanian territory

Plants absorbing less carbon dioxide in 2023, accelerating global warming

Drone delivers STI tests at Romanian festival to “make sure happy endings are not itchy”

Read in IntelliNews Pro
Get IntelliNews Pro

Related Content

Bucharest summons Russian chargé d'affaires after drone debris hits Romanian territory

Plants absorbing less carbon dioxide in 2023, accelerating global warming

Drone delivers STI tests at Romanian festival to “make sure happy endings are not itchy”

Data

Russia’s CBR ups key interest rate by whopping 200bp to 18%, increases GDP growth forecast to 3.5% for 2024

The board of the Central Bank of Russia (CBR) increased the key interest rate by 2 percentage points from 16% to 18%, in line with consensus expectations at the policy meeting on July 26. - the first hike since December 2023.

The NBU keeps rates on hold at 13% due to rising inflation pressure

The National Bank of Ukraine (NBU) has decided to maintain its key policy rate at 13% on July 25, halting a series of three consecutive rate cuts.

Moldova's pro-Russian separatist Transnistria sends 80% of its exports to the EU

War in Ukraine forced Transnistrian exporters to focus on Western markets as routes to Russia blocked.

How energy intensive are data centers?

While countries like China and the United States had the highest electricity demand by a considerable margin, a new player that rivals the consumption of some of the biggest economies and is bolstered by the ongoing AI hype and data center use.

Hungarian central bank moves in line with forecast with 25bp rate cut

The central bank is likely to carry out 1-2 more rate cuts this year, bringing the rate to 6.25-6.50%, which would still be the highest among its CEE peers.

Russia’s CBR ups key interest rate by whopping 200bp to 18%, increases GDP growth forecast to 3.5% for 2024
12 hours ago
The NBU keeps rates on hold at 13% due to rising inflation pressure
14 hours ago
Moldova's pro-Russian separatist Transnistria sends 80% of its exports to the EU
1 day ago
How energy intensive are data centers?
2 days ago
Hungarian central bank moves in line with forecast with 25bp rate cut
2 days ago

Follow Us On

Most Read

  1. Dubai heatwave: Temperature feels like 62°C as scientists explain extreme conditions
    9 days ago
  2. Six out of nine “planetary boundaries” have been crossed and a tenth has appeared
    2 days ago
  3. How energy intensive are data centers?
    2 days ago
  4. Earth records hottest year since records began
    2 days ago
  5. Plants absorbing less carbon dioxide in 2023, accelerating global warming
    1 day ago
  1. Dubai heatwave: Temperature feels like 62°C as scientists explain extreme conditions
    9 days ago
  2. Russia overtakes Japan to become the fourth largest economy in the world in PPP terms
    1 month ago
  3. Global access to energy starts to fall for the first time in a decade, says IEA
    25 days ago
  4. LONG READ: The war in Ukraine is inching towards a ceasefire as pressures mount
    19 days ago
  5. Fresh evidence suggests that the April 2022 Istanbul peace deal to end the war in Ukraine was stillborn
    3 months ago

Reports

Dismiss