Page 56 - bne IntelliNews Southeastern Europe Outlook 2025

Meanwhile, the trade-in-services surplus fell to €11.6bn, a €2.2bn decline compared to the previous period, further exacerbating the CA imbalance.
The primary income balance, reflecting net dividend and interest payments to foreign investors, also worsened, with its deficit increasing by €1.3bn (+16% y/y) to €9.5bn. The rising outflows underscore the ongoing impact of foreign investment returns on Romania’s external position.
Romania’s CA deficit remains a critical concern, reflecting structural weaknesses in trade dynamics and external dependence. While nominal GDP growth may slightly soften the deficit ratio, the upward trend in the trade and investment income deficits signals persistent vulnerabilities.
Foreign direct investment (FDI) in Romania reached €6.3bn in the 12 months to October 2024, a 3.3% y/y increase, according to data from the National Bank of Romania (BNR).
This improvement was driven entirely by higher financing from foreign parent companies to their Romanian subsidiaries, which saw a net increase of €863mn during the period, compared to a €726mn contraction in the prior 12 months.
Despite the headline growth, underlying FDI components showed weaker trends. Equity investments, excluding reinvested earnings, dropped by 27% y/y to just €1.3bn, while reinvested earnings also fell by 18% y/y to €4.2bn. The decline in reinvested earnings outpaced the modest 2.1% y/y drop in overall earnings generated by FDI-backed companies, which totalled €11.5bn in the 12 months to October.
A broader view of FDI in Romania reveals that the country’s €120bn stock of foreign investments generated nearly 10% returns over the past 12 months, with €11.5bn in earnings. However, reinvestment rates declined significantly, with only €4.1bn reinvested compared with €5.1bn in the previous 12-month period.
56 SE Outlook 2025 www.intellinews.com