May FDI drop 30 percent

Despite the recovery of the market in April, FDI inflow in Romania dropped in first five months by 42.02% year-on-year, down to 2.475 billion euros, according to data provided by National Bank of Romania.
Similarly, the current account gap fell 75.5% in first five months, down to 1.78 billion euros.

After two successive months of growth in FDI, the month of May has seen an inflow of direct investments of 420 million euros, 30% less than April.

Jan-May FDI level is 1.4-fold higher than current account gap.

The performance if the FDI market has weakened from early 2009. After first two months, the FDI inflow in Romania increased 38.1%, only to mark an annual decline of 13.9% at the end of first quarter. FDI suffered a sharper nosedive after first four months, falling 44.4% YoY.

In first five months, FDI inflow stood at 4.269 billion euros, which covered only a 63% share of the CA deficit at that time.

Of the FDI volume in first five months this year, equity stakes accounted for 43.2%, net reinvested earnings – 9.1% and net credits received from foreign investors, the remaining 47.7% share, NBR informs.

The loans contracted by Romanian subsidiaries from their foreign parent companies have the potential of deepening current account deficit, as they will be returned on due dates.

Romania’s balance of payments sank 75.5% in the five months to May this year, to 1.776 bln euros, on sharp contraction of trade gap.

A year earlier, the FDI flow in Romania increased by 24.5%, up to 9.02 bln euros, covering 53.5% of CA gap.

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