Current account deficit to go down slightly in 2008 and 2009

Current account deficit will go slightly down in 2008 and 2009, it will stand at 13.6% of GDP, and 12.4% of GDP respectively, compared with the 14% in 2007, reads a Macroeconomic Synthesis drawn up by research specialists of the Romanian Commercial Bank (BCR).
Foreign direct investment and European funds will finance a wider share of the current account deficit, in 2008.
The year 2008 could bring a major change compared with the previous years, the growth pace of the current account deficit is lower than the growth pace of GDP.
According to BCR, the substantial rise in GDP can be a solid argument for the invalidation of forecasts of rating agencies about a current account deficit of 17.5% of GDP in 2008.
European funds worth some 560 million euros which reached Romania not long ago will have a positive effect on the balance of payments in Q3.
The effects at the level of the rate of exchange, already seen, are related to the curbing of the pressure caused by the depreciation of Romanian leu currency, which continues to be put by the behaviour of speculating investors, in the context of international financial turbulence.
In H1 2008, the current account deficit rose by only 8.5%, compared with an annual growth of 96.5% in the same period last year.
Exports exceeded imports in H1, so the balance of trade was positive.
Foreign direct investment reached 4.8 billion euros Jan – June 2008, in consequence of the increased attractiveness at world level of the business environment in Romania. With the trend being maintained, BCR will revise upwards its estimate on foreign direct investment this year, its value at the end of 2008 can be, in an optimist scenario, higher than the maximum in 2006, when BCR was privatized.
The pace of current outflows of funds from the private sector is higher that the inflows of funds, both of them go down at present. The economic difficulties in Spain and Italy, traditional destinations of Romanian employees abroad, negatively influence the sums transferred by them to Romania, while the import of manpower from out of the EU puts pressure through money outflows.

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