Romania's current account (CA) deficit roughly doubled to EUR 1.08 billion in November, from EUR 530 million in the same month of 2019, according to Romania's National Bank (BNR).

For the whole January-November period, the CA gap edged up by only 1.1% year-on-year, to EUR 9.76 bln (4.8% of GDP) after it regularly posted more moderate values during the first part of the year.

In the rolling 12 month period ending November, the CA gap neared EUR 10.6 bln (5% of GDP) - not far from the EUR 10.4 bln calculated in November 2019.

The steady deterioration of the foreign trade with goods through 2020 (and the years before) comes not as a surprise, and the dynamic of the primary income balance is also understandable, as it mainly reflects the outflows of dividends, interest derived by foreign investors, and wages earned by non-resident workers.

In November, the EUR 53 mln rise in the trade deficit with goods and services (to EUR 701 mln) explains a small part of the EUR 500 million CA gap widening compared to the same month of 2019.

The foreign investors indeed derived more dividends and interest, which pushed down the net outflows under the primary income account by EUR 162 mln to a deficit of EUR 302 mln.

But what was more surprising in November (and in the whole 2020), was the secondary income account, which in November turned to a negative balance (outflows) of EUR 77 mln from a surplus of EUR 248 mln in the same month of 2019.

The public administration account indicates outflows of EUR 280 mln in November and EUR 229 mln in Jan-Nov.

The account mostly reflects the donations, transfers, and grants in the account of the Romanian state - expected to rise sharply after the EU funds start flowing.

In contrast, the households' account under the secondary income section shows EUR 1.8 bln net inflows in January-November, just 3% down from the same period last year, indicating that the informal remittances remained relatively strong last year. 

(Photo: Octav Ganea/ Inquam Photos)

iulian@romania-insider.com