Romania’s current account (CA) deficit has widened by 16% y/y to EUR 1.65 billion in January, after the 37% y/y surge in 2024, according to data published by the central bank BNR. 

The improvement in Romania’s external balance, expected for this year, is not yet visible in the January CA figures. The country’s GDP is no longer leaping up at a high pace (partly thanks to lower inflation but also because of moderate economic growth) as in the past years, and this means the CA gap should at least stay constant nominally if not contract, in order to result in a smaller deficit-to-GDP ratio.

The CA deficit in the 12 months to January has widened by 32% y/y to EUR 29.6 billion, not far from the EUR 29.4 billion in 2024. It is an improvement from the 37% y/y advance in 2024, yet insufficient.

The CA deficit, one of the twin deficits Romania has to address in the coming years in order to avoid further deterioration of its macroeconomic balance, accounted for 8.3% of GDP in 2024. 

Rating agency Fitch, in its January 24 update, projected a deficit-to-GDP ratio of only 7.3% in 2025 assuming 2.1% GDP growth and moderate fiscal consolidation (to 7.5% of GDP public deficit). Moody’s, on March 14, did not indicate a specific projection for Romania’s CA deficit but expressed expectations for milder fiscal consolidation (to 7.8% of GDP deficit this year), meaning, in principle, a slightly wider CA gap as well. The state forecasting body CNP projected last November a 7.4%-of-GDP CA gap for 2025.

Romania’s CA deficit is driven by the net import of goods and services (particularly goods), and this was particularly the case in January – when the net import of goods and services surged by 75% y/y to EUR 1.88 billion compared to a 36% y/y advance (to EUR 21.4 billion) in 2024. 

Exports increased by only 3.8% y/y while imports advanced by 11% y/y, with similar wide discrepancies in goods and services. 

The primary income balance was (quite unusually) positive: EUR 199 million, compared to a deficit of EUR 454 million in January 2024. The causes of the one-off improvement are not related to the main flows of incomes (dividends and interest derived by foreign investors) that remain oriented outwards.

The balance of secondary incomes was positive in January 2025, but smaller compared to last year: EUR 32 million compared to EUR 106 million. However, this did not substantially alter the overall CA balance, which owes its widening in January primarily to the 75% advance of the net import in goods.

iulian@romania-insider.com

(Photo source: Vlad Ispas/Dreamstime.com)