Romania’s current account (CA) deficit has narrowed marginally (-1.2% y/y) to EUR 2.66 billion in August 2025, bringing the CA gap in 12 months to August to EUR 29.6 billion (+17% y/y), or 8.1% of GDP, according to data published by the National Bank.
The CA gap to GDP ratio thus eased slightly from 8.2% in July, after it neared 9% in May, remaining well above the 7.5% ratio as of August 2024.
The CA gap’s moderate compression over the past couple of months, which occurred amid chronic deterioration of Romania’s external position (CA gap was only 5.1% of GDP in 2020), is consistent with smaller trade deficits prompted by the beginning of the expected slowdown in domestic demand, particularly on the consumption side.
Thus, the trade gap (goods and services) in the 12 months to August accounted for EUR 21.6 billion (+12% y/y) – after a gradual decline from almost EUR 23 billion in April. The compression is marginal, but combined with a nominal increase of GDP, it resulted in a significant improvement of the country’s external deficit (revealed by the 0.8 pp improvement in the CA-to-GD ratio over a period of only three months.
On the downside, the inflow of foreign direct investments (FDI) in Romania is also losing momentum to under EUR 6.1 billion in 12 months to August (-8% y/y) in gross terms from EUR 6.9 billion in 12 months to June.
Net FDI to Romania contracted by 12% y/y to EUR 5.5 billion in 12 months to August. Out of this, only EUR 2.3 billion (still a significant 55% up y/y) was new equity with EUR 1.8 billion in reinvested earnings (out of a total of EUR 10 billion earnings generated by FDI companies in Romania, -13.7% y/y) and EUR 1.4 billion net borrowing by local FDI companies from foreign groups.
Notably, the share of reinvested earnings as a part of total earnings derived by FDI companies in Romania dropped to 18% in 12 months to August, from 34% one year earlier.
iulian@romania-insider.com
(Photo source: Vlad Ispas/Dreamstime.com)
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