Charts of the Week

Romania: a widening current account deficit in 2022


For several years, Romania has been running a structural current account deficit. This year, the deficit is expected to worsen and could come close to 10% of GDP after -7.3% in 2021. The deficit had already reached EUR 20.2 billion over the first nine months of the year, well above the figure seen for 2021 as a whole. Romania's deficit is the largest amongst Central European countries.

Romania: current account balance

The main reason stems from the deterioration in the energy trade balance, which according to the latest figures reached EUR -4.5 billion for the January-July period. Imports of food and industrial goods have also contributed, but to a lesser degree compared to energy. By contrast, imports of consumer durables have remained soft.

Exports were still relatively dynamic (up by a year-on-year rate of 26.2% compared to January-September 2021) but not enough to prevent a widening of the trade deficit (EUR 23.8 billion from January to September 2022). The primary income balance has also deteriorated. By contrast, the balance of services has remained in surplus and has only allowed to contain the the trade deficit by a marginal scale. Yet the worsening current account has not translated into an increased perception of risk, judging by the slight appreciation of the Romanian leu against the euro since January 2022. Romania even recorded positive net portfolio investment flows during the first three quarters, against a backdrop of outflows of this type of capital in a number of emerging countries.

Financing the current account gap is not a major problem. It would mainly be covered by flows of foreign direct investment (FDI), a stable component of capital flows and European funds. FDI reached EUR 6.2 billion in the first nine months of the year. FDI and European funds would make it possible to plug around 55% of the expected deficit for 2022.