Apart from data revisions, the deterioration in April came mainly from primary income suggesting dividend outflows from multinational companies. There is some cooling off in the widening trade deficit but it still remains well above the surplus posted on the balance for services.
Foreign direct investments increased 22.1% YoY in January-April but are covering only 70.8% of the current account shortfall. Despite the sharp slowdown in household spending in 1Q18, there are no convincing signs of a correction in the external imbalance.
Despite weaker fundamentals, the central bank (NBR) is unlikely to allow a large depreciation in the Romania leu due to high exchange rate pass-through, with inflation already way above the target interval.