Romania’s trade deficit for goods (chart) contracted by 12.2% y/y to €28.9bn (9.2% of GDP) in the 12 months to October 2023, as imports edged down by 0.5% y/y to €122.7bn and exports advanced by 3.7% y/y to €93.8bn (30% of GDP). 

The country’s deficit-to-GDP ratio peaked at 11.8-11.9% from October 2022 to January 2023, when the prices of oil and gas rose amid high uncertainty caused by the war in Ukraine and the availability of resources.  Both exports and imports were inflated by the high commodity prices during that period.

At 9.2% of GDP in the 12 months to October 2023, Romania’s trade deficit (goods) returned to the level of August 2021. 

The export-to-GDP ratio edged down marginally to 29.8% in the 12 months to October 2023 from 30.5% in August 2021. 

This might not seem to be a notable performance – but it is, given the real strengthening of the local currency over the period since 2021. The export-to-GDP ratio, calculated on a rolling 12-month basis, exceeded 34% in January 2023 – but this was a transitory effect of high commodity and intermediary goods prices. 

The outlook remains, however, challenging for Romania’s exports and trade deficit given the economic slowdown in its main commercial partners and the local producers’ proven weak ability to substitute imported goods.

Domestic demand remains robust, driven by the Resilience Facility inflows and the tight labour market keeping the employees’ incomes steady in real terms.

The imports will rise faster than exports in 2024, according to the government’s forecast, and at a similar rate to exports in the years to come. The current account (CA) deficit to GDP ratio is expected to narrow, but not as an effect of improvements in the trade with goods.