Romania’s trade gap narrows amid smaller foreign trade in Jan

Romania's foreign trade deficit narrowed by 9.5% year-on-year to under EUR 1.2 billion in January, as both the exports and imports decreased in value terms compared to the same month of 2020. It was the smallest monthly trade gap since September 2019.

The exports decreased by 4.9% to EUR 5.4 bln driven mainly by smaller exports of fuels (-34% year-on-year), food and live animals (-8.1% yoy), tobacco and beverages (-24% yoy), and unprocessed raw materials (-15.5% yoy). On the upside, the exports of transport means, which account for nearly half of Romania's exports, edged down by only 1.6% yoy.

Meanwhile, Romania's imports dropped by 5.8% yoy to EUR 6.6 bln, dragged down by lower imports of fuels (-33% yoy).

Romania's exports and imports, which contracted by 10% and 6.6% respectively in 2020, are expected to recover in 2021, along with the recovery in economic activity and supply chains in Europe.

As the dynamic of the recovery in the health sector remains uncertain, the magnitude of the rise in the foreign trade volumes is also uncertain. Romania's state forecasting and strategy body CNSP projects a robust recovery of 7.7% for exports and 9.7% for imports this year, with the trade gap widening to EUR 21.4 bln (nearly 10% of GDP).

The dynamics assume significant inflows of funds from the European Union - but this is another source of uncertainty as the funds under the Recovery and Resilience Program are expected in September at the earliest.

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