Foreign direct investment witnessed a significant adjustment in July, going down by 76.7% to 203 million euros, a quarter of what they were in the corresponding month of last year, 872 million euros. The decline has been steeper, after investments halved in June compared with the same interval last year. In addition, foreign direct investment was no longer able to fully cover the current account deficit in July, as it had happened in the previous months. Foreign investments in the first seven months reached 3.09 billion euros, down 47.9% compared with the value registered in the same interval of 2008, 5.9 billion euros, according to NBR data. “The bulk of these investments went to the real economy, while the banking sector got approximately 10% of the total,” commented Florin Sinca, BCR analyst. Out of the total investments in the first seven months, 41.2% were intra-group credits and 48.6% reinvested profit.
The decline of investments this year is in line with the analysts’ estimates, which forecast 50% or even more severe decline for entire 2009 compared with last year, when the volume of foreign direct investment exceeded 9 billion euros.