According to data released by the Central Bank (BNR), Romania’s current account deficit increased by 34% year-on-year to EUR 12.2 billion in the first half of the year (H1) of 2024.
CA deteriorated particularly sharply in the second quarter (Q2): +57% year-on-year to EUR 8.1 billion.
Looking longer term, Romanian government spending rose by just 13.3% year-on-year to EUR 25.7 billion in the 12 months to June, accounting for about 7.5% of GDP – the same as a year earlier. The main factor was stronger net imports of goods, but the higher amounts spent by Romanians on holidays abroad and more expensive external debt also contributed to the overall picture.
The rolling 12-month CA deficit, expressed as a ratio of the period’s GDP, peaked at 9.5% in the third quarter of 2022 as the country faced high prices for natural gas (and other commodities) in the period following the outbreak of the war in Ukraine. However, it declined to 6.6% a year later, so the trend has now reversed.
The most important element of Romania’s foreign trade balance remains trade in goods, where the deficit increased by almost 30% year-on-year in the second quarter (to EUR 8.5 billion – exceeding the foreign trade balance gap of EUR 8.1 billion), by 14.2% year-on-year in the first half of the year (to EUR 15.0 billion) and remained unchanged in the rolling 12-month period (+0.1% year-on-year to EUR 30 billion against the foreign trade balance deficit of EUR 25.7 billion).
Romania’s trade in services surplus, supported by robust exports of IT services, deteriorated by 10% year-on-year in the first quarter (to EUR 3.1 billion), by 15% in the first half (to EUR 6.1 billion) and by 14% in the 12 months to June 2024 (to EUR 12.4 billion). Rising imports of tourism services were the main reason for the deterioration in the country’s services balance, while exports of IT services (EUR 10.3 billion in the 12 months to June 2024) grew only very slowly by 2.4% year-on-year.
The deficit in primary incomes (flows generated by labour and capital, such as wage remittances, dividends and interest) increased by 20% year-on-year to EUR 9.3 billion in the 12 months to June 2024. Interest outflows from financial investments by foreigners in Romania (mainly foreign currency bonds) increased by 48% year-on-year to EUR 3.6 billion.
As for the secondary income account, its surplus increased by an impressive 42% year-on-year in the 12 months to June 2024, but remains moderate: it amounts to only EUR 2.0 billion for this period.
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