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Foreign direct investment in Romania halved in first nine months
In brief
Foreign direct investment in Romania decreased by 49.6% in the first nine months, as against the same period last year, to 3.525 billion euros, but they fully covered the current account deficit, being 6.4% above its level, the central bank announced Wednesday.
"The current account deficit in the period January-September 2009 was financed entirely through direct investments of non-residents' in Romania, which registered 3.525 billion euros, compared to 6.994 billion euros in the period January-September 2008", reads the release of the National Bank of Romania (BNR).
At the same time, after the first nine months of this year, the current account of the balance of payments registered a deficit of 3.313 billion euros, down 74.6% over the same period in 2008.
During the period January-September 2009, intra-group loans accounted for 50.3% of foreign direct investment, totalling 1.774 billion euros and equity stakes, including reinvested profits, 49.7%, respectively 1.751 billion euros, BNR also announced.
In the same period of 2008, intra-group loans totalled 2.4 billion euros and equity - 4.58 billion euros.
The credits taken by the companies located in Romania from the parent companies based abroad have the potential to deepen the current account deficit, as they will be returned at maturity.
In the first eight months, foreign direct investment had decreased by 53.1% as against the same period last year, to 3.154 billion euros, almost 29% above the current account deficit for that period.
The situation of the foreign direct investments deteriorated, however, compared to the beginning of this year. Thus, after the first two months, foreign direct investment in Romania had increased by 38.1%, but, at the end of the first quarter, registered an annual decline of 13.9%.
Investments dropped more after the first four months, namely by 44.4%, then the decrease tempered slightly, so that in the first five months, foreign direct investment fell by 42% and, at end of the first half, the decrease was 43%. The decline began to grow later, and foreign direct investment had lowered by 48% in the first seven months.
Last year, foreign direct investment in Romania increased by 24.5%, to 9.02 billion euros, covering 53.5% of the current account deficit.
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