A Romanian economist on Tuesday warned about the country’s widening current account deficit which has doubled from last year.
Cosmin Marinescu, a presidential adviser, said Romania’s deficit, the second-highest in the European Union, rings a “serious alarm bell”.
Eurotstat published figures for the 27-member bloc on Tuesday. Romania has a deficit of -€3 billion for the first four months of the year. That is double what it was for the same period in 2020.
“Romania continues to accumulate, unfortunately, some of the largest current account deficits in the European Union as a share of its GDP”, Mr Marinescu wrote on Tuesday after taking part in the National Recovery Forum.
The EU forecast its deficit will be 4.9% of the GDP for 2021, the highest in the EU after Greece and Cyprus. Mr. Marinescu said it could be a full percentage point higher.
“We are the only country in the region with growing trade gap” he said. “We need to come up with proactive policies to counter these vulnerabilities and improve “ our exports.
However he growing foreign investor confidence in the Romanian economy was encouraging.
“There is an increase in the flow of direct foreign investment in the first few months of this year”.
“Beyond a robust economic recovery, we continue to face the burden of twin deficits, as in the years before the pandemic, ” he said. He was also referring to the budget deficit which measures domestic expenditure.
Romania’s economy is expected to grow by 5.1% this year, the European Commission forecast. The International Monetary Fund puts the growth rate even higher at 6%.
Despite having one of the highest recovery rates in the EU, “It is important how we grow” he wrote.
“We have to be sure that behind this rapid growth, which is quantitative there are qualitative challenges” , which highlights the imbalances “.
Thirteen EU members for which non-seasonally adjusted data are available, recorded surpluses for the current account balances, Eurostat, the EU’s statistical office said.
Eleven members posted deficits and two were in balance in the first quarter of 2021.
Germany had the highest surplus (+€66.5 billion), followed by the Netherlands (+€22.6 billion).
France had the largest deficit of -€11.0 billion, followed by Romania and then Greece (-€2.7 billion).