Romania\u2019s current account (CA) deficit increased by 25% y\/y to EUR 2.8 bln in August 2024 amid the general deterioration of the external balance across nearly all chapters except for the transfer of funds to non-government (households mainly), according to data published by the National bank of Romania (BNR).<\/p>\n
The deficit in 12 months ending August widened as well to EUR 26.6 bln \u2013 or 7.9% of GDP, up from 7.1% of GDP 12 months earlier. The deterioration was, again, visible in all chapters (trade with goods, trade with services, and primary account balance \u2013 meaning the volume of net dividends and interest paid to foreign investors).<\/p>\n
The trade deficit (goods and services) in 12 months to August 2024 increased by 25% y\/y to EUR 19.2 bln, while the net outflows of dividends and interest to foreign investors also expanded by 25% y\/y to EUR 9.6 bln.<\/p>\n
The net transfers under the secondary income account (grants, transfers to households) increased by 31% y\/y \u2013 but they are comparatively low, only EUR 2.2 bln in 12 months to August.<\/p>\n
Romania\u2019s CA balance is thus deteriorating, rather than narrowing as initially expected for this year \u2013 and this is because of the robust private consumption and significant fiscal slippage (only partly justified by the investments under the Resilience Facility scheme).<\/p>\n
On the external balance side, S&P, in its latest update on Romania\u2019s sovereign rating on October 11, said it expected the current account deficit to widen from 7% of GDP in 2023 to 8.3% of GDP in 2024 and decline slower to 7.3% of GDP in 2027.<\/p>\n