Romania’s trade deficit is declining due to lower energy costs and subdued domestic demand. In July, the country marked a significant 32% year-on-year reduction in its trade deficit for goods, amounting to EUR 2.28 billion. This achievement signifies the sixth consecutive month in which Romania reported a smaller trade deficit than the previous year.
The decrease in the trade balance is primarily attributed to a 3.0% year-on-year decline in exports, totaling EUR 7.66 billion, following a -1.5% year-on-year drop in June. Conversely, imports experienced a more substantial decline, plunging by 11.5% year-on-year (compared to -5.5% year-on-year in June) to EUR 9.94 billion. This shift in both exports and imports can be attributed to a combination of factors, including subdued economic activity, weakened private consumption, and a deviation from the trends observed in the previous year when rising commodity prices led to a rapid growth in both exports and imports.
Over the past 12 months, the trade deficit has gradually narrowed, reaching EUR 30.9 billion in July, representing a 4.4% year-on-year increase. This figure accounts for approximately 10% of Romania’s GDP, down from EUR 34.3 billion in January.
Notably, the moderate nominal increase in the trade deficit (4.4% year-on-year) contrasts with the more substantial nominal growth in GDP (17% year-on-year as of June). Consequently, this results in a reduced trade deficit-to-GDP ratio of 10.2% as of July, down from the 11.4% ratio observed one year earlier.
Additionally, Romania’s consumer price inflation eased to 9.44% year-on-year in July, marking a drop from the 10.25% year-on-year figure recorded in June, and the first time it fell below double digits.
Source: Romania Insider, The National Institute of Statistics (INS)
