During January-September 2005, the deficit of the current account soared to EUR 3,987mln, increasing by 28.2% y/y, however the growth pace has diminished as compared to 48.6% advance in the first eight months 2005. The widening of the C-A deficit was determined mainly by the foreign trade deficit which surged by 50% y/y, amounting to EUR 4,821mln, while in September it advanced by EUR 549mln.

Although the exports are increasing as compared to last year, they can not keep up with the steep growth of the imports, as our economy is not able to satisfy the domestic demand. In addition to this, it is becoming clear that our economy reveals a certain grade of overheating, as the C-A gap and credits are expanding sharply, while the excess liquidity is endangering our inflation targets. After the first three quarters of 2005, the current account gap reached to near 5.4% of the whole year projected gross domestic product, which is expected to reach EUR 75bln, according to the National Institute of Forecast.

In September, the current account deficit advanced by EUR 739mln m/m, substantially higher as compared to August when it widened by EUR 296mln as the current transfers couldn't reduce the negative effects induced by the trade and income balances. The current transfers, an indicator of the funds sent to Romania by Romanians working abroad, reached EUR 295mln m/m in September, totaling EUR 2.6bln since the beginning of the year, up by 22% y/y vs. 45% in the first eight months of 2005, as during the autumn the transfers decrease significantly. These data are NBR's estimations and they may be modified in the following period.

Melania Hancila - Research Analyst
Treasury Division

Finansbank (Romania) S.A.
Phone: +40 21 301 73 42
Fax: +40 21 318 09 61