Romania’s deficit of the trade in goods (chart) has widened by 18.4% y/y to €8.4bn in Q3 as imports (+4.9% y/y) are stimulated by private and public demand while exports (+0.7% y/y) dwindle amid problematic industrial development and consumer confidence in Europe. 

The 18.4% y/y advance looks impressive but it’s more an effect of volatility, while deeper concerns are related to the structure of the trade deficit. Romania is increasingly importing consumer and hopefully investment goods, but it fails to develop value-added or export-driven industries thus remaining linked to the activity of the major industrial groups.

In the medium term, the country’s trade in goods is rather stagnant with both export and imports having remained within narrow bands for almost three years.  The deficit-to-GDP ratio, calculated for the 12 months ending September actually decreased to 9.5% in 2024 from 9.8% calculated as of September 2023 under comparable terms. Higher nominal GDP offset the 8.6% y/y advance of the 12-month trade deficit.

But it is the structure of the deficit that raises more concerns. After filtering out the effects of the costly energy imports and lucrative grain exports in 2022-2023, the dynamics of Romania’s “structural” foreign trade shows more net imports of consumer and investment goods now.

Exports increased by only 0.7% y/y to €23.0bn in Q1, while imports rose by 4.9% y/y to €31.4bn. 

The €8.4bn gap in the quarter is smaller than the deficits seen in the second half of 2022 but the structure is changing. While the wide deficit was initially driven in H2 2022, after the war began in Ukraine, by expensive energy imports, it is now increasingly driven by consumer and investment goods.