Romania: Current account deficit at -4.0% of GDP in October
The current account (C/A) deficit reached EUR8.0 billion for January-October 2018. That’s 52% higher than the same period of 2017
The persistent deterioration in Romania’s C/A continued into October when another EUR1.0 billion was added to the total deficit. The main driver is the trade balance, which widened by 42.5% year-on-year in October, the fastest pace this year, offsetting by large the improvement in primary income
January-October C/A (% of GDP)
On a 12-month rolling basis, the total external position dipped into negative territory, coming in at EUR-1.05 billion, the lowest in more than five years. Among the very few positives, we notice an improvement in foreign direct investments (mainly due to data revisions), which now cover 61% of this year’s C/A deficit.
C/A breakdown
Deteriorating metrics
Hopes for a correction in the C/A deficit this year seem late as even our slightly pessimistic -4.2% of GDP deficit forecast for 2018 would seem a success if achieved. With no obvious signs of a fiscal consolidation in the near future, modest EU funds absorption and sluggish FDIs, RON relative strength could be questioned rather sooner than later.
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
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