Romania’s foreign trade stagnates and shrinks as a share of total economy
<p>Romania’s trade deficit with goods increased by 29% y/y to EUR 2.95 billion in July, as the exports’ modest improvement (+8.6% y/y) was offset by the robust increase (+13.4% y/y) in imports, according to the statistics office INS.</p>

<p>It could be concluded that the robust demand for private consumption, driven by higher wages, drove the imports and the trade gap – but it would be short-sighted. In fact, the 12% y/y nominal advance in consumption in 12 months to June (latest data available) failed to push up the imports that contracted by 1.5% y/y.&nbsp;</p>

<p>In volume terms, the 4.4% y/y advance in consumption (+4.5% y/y for households) pushed up the imports (goods) by only 0.5% y/y. The import of services increased by 1.0% y/y. But the GDP rose three times faster than the import of goods, by 1.9% y/y.</p>

<p>From a slightly broader perspective, Romania’s exports and imports (hence the trade gap) expressed in nominal (euro and local currency) terms have actually featured no particular trend for the past two years.&nbsp;</p>

<p>Exports, imports, and trade have stagnated nominally.&nbsp;</p>

<p>High annual growth rates, such as the deficit’s sharp advance in July ( or Q2), reflect certain volatility but not necessarily real trends.&nbsp;</p>

<p>In comparative terms, as a share of the total economy (GDP), both exports and imports (and the deficit) shrunk.</p>

<p>The exports in 12 months to July contracted by 1.9% y/y to EUR 92.6 billion, imports edged down by 1.0% y/y to EUR 124.0 billion, and the trade gap increased marginally by 1.5% y/y to EUR 31.4 billion.&nbsp;</p>

<p>In the meantime, for the same period of time, the GDP increased by 11.3% y/y (as of June 2024, the latest data available), diluting Romania’s foreign trade figures – including the deficit.</p>

<p><em>iulian@romania-insider.com</em></p>

<p><em>(Photo source: <a href="https://www.dreamstime.com" rel="noopener" target="_blank">Prasit Rodphan/Dreamstime.com</a>)</em></p>