Romania’s current account (CA) deficit widened by 7.5% y/y to EUR 8.8 billion in Q3, despite a slight improvement in the balance of trade in goods (the country’s main source of external deficit), according to data published by the National Bank (BNR).
The deficit of the trade in goods contracted by 7.8% y/y (by EUR 666 million) to EUR 7.9 billion in Q3.
Unusually, the deficit in the trade with goods was smaller than that of the total Current Account in Q3. However, this improvement was fully offset by the 25% y/y (+EUR 992 million) expansion of the net outflows generated by the foreign direct and portfolio investors in Romania through the profits generated by the FDI companies and the interest charged by portfolio investors.
The net outflows generated by these direct and portfolio investors reached a total of EUR 4.9 billion (+25% y/y) in Q3. Out of this, EUR 3.8 billion (+22% y/y) was the profit of the FDI companies, and EUR 1.2 billion (+22% y/y) was the interest paid on the country’s external debt.
Part of the FDI companies’ profit was reinvested as retained earnings (EUR 2.2 billion). However, irrespective of whether they are reinvested or repatriated, FDI companies’ profits are counted as outflows under the Balance of Payment methodology, deteriorating the Current Account’s balance.
In 12 months to September 2025, Romania’s CA deficit widened by 15.8% y/y, compared to the previous 12-month period, to EUR 30.6 billion. Based on the latest available GDP data, this means 8.4% of GDP – with the ratio to be diluted slightly after the Q3 GDP is released. In comparable terms, this compares with 7.9% of GDP as of September 2024.
The ratio was 8.2% as of June 2025, at the end of Q2, close to the final reading as of September 2025 after updated GDP data is released. Further improvement in Romania’s CA balance is expected in line with the fiscal consolidation and subdued demand in general.
The deficit of the trade in goods increased by 6.3% y/y to EUR 33.8 billion, and the net outflows of FDI profits and external debt interest rose by 4.6% y/y to EUR 15 billion. The personal remittances, on the contrary, dropped: to EUR 3.5 billion (-2.3% y/y) wage remittances and to EUR 1.5 billion (-33% y/y) other personal transfers. Another positive element of the CA balance, the net export of services rose by 3.5% y/y to nearly EUR 12.5 billion.
The net FDI inflows to Romania returned to EUR 5.76 billion in 12 months to September, a mere 0.7% up y/y after volatile developments throughout the past year. Notably, the new equity investments more than doubled (+134% y/y) to EUR 2.5 billion. The reinvested earnings remain larger, EUR 2.7 billion, despite the 29% y/y decline.
The stock of FDI in Romania reached EUR 129.7 billion at the end of September, up from EUR 124.0 billion one year earlier. Out of the EUR 5.6 billion increase in FDI, EUR 2.7 billion was the reinvested earnings, while another EUR 8.4 billion of FDI earnings was repatriated. The total EUR 11.1 billion of FDI profits account for a margin of some 8.5% – marginally up from 8.1% in 2019.
iulian@romania-insider.com
(Photo source: Vlad Ispas/Dreamstime.com)
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