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Increasing trade deficit, in an increasingly difficult European context: in all other states it is the opposite

de Marin Pana , 26.8.2019

Romania is the only country in the region where results in the first half of this year in foreign trade worsened, according to data published by Eurostat.

With the lowest increase in exports and largest advance in imports, the negative balance advanced by about 20%, in contrast to deficit contractions recorded by Bulgaria and Poland, as well as the surplus increase in Hungary and the Czech Republic.

Unfortunately, the situation has significantly deteriorated even compared to the same period of 2018, when we were anyway the only country with major problems in terms of balancing inflows and outflows of goods.

Thus, from a minus of EUR –6.5 billion in S1 2018 we reached EUR -7.8 billion in S1 2019.


  • Foreign trade results in some EU countries, S1 2019
  • Export-Import  Balance S1 2019        Balance S1 2019
  • Romania
  • Bulgaria
  • Hungary
  • Poland
  • Czech Republic


Very suggestive, if reference is made to the ratio between exports and imports, in order to see the extent to which the latter are covered by foreign currency receipts, Romania appears with a coverage ratio of only 82%, compared to 92% for Bulgaria, almost 100% for Poland, 105% for Hungary and a very hard to reach (for us) 114% for the Czech Republic.

This situation constantly generates an additional demand of foreign currency and puts pressure on the Romanian leu exchange rate against Euro, including with a devaluation perspective which, theoretically, would tend to balance the foreign trade result, by reducing the prices for exports and increasing them for imports.

With the depletion of resources to stimulate the economic growth by increasing incomes of the population (especially for those working in the public sector and pensioners) and with the need to reduce the surplus of domestic demand in order to not increasingly exceed the potential GDP (the one that would allow a sustainable growth), Romania should have shifted toward the external demand.

EU situation and the major problem arising

Unfortunately, although the situation helps us to somewhat limit the expansion of foreign deficit, data at the EU level show a transition of the foreign trade evolution rhythm to the negative range, with an even more pronounced contraction in intra-Union trade exchanges.


  • Foreign trade results for EU28 in S1 2019
  • S1 19   S1 18   Change           June 19           June 18           Change
  • Export to non- EU areas
  • Imports from non- EU areas
  • Balance with non-EU countries
  • Intra-EU trade


The growth rate of trade with the rest of the world clearly exceeded the level recorded on the single market (+ 4.2% in exports and + 4.9% in imports, non-EU, compared to only + 2.3% in intra-EU terms, for the entire first half of 2019). Then a more pronounced contraction occurred in June, with -6.4% at the domestic level compared to about four percentage points for the trade with non-EU states.

However, Romania carries out about three-quarters of its trade with the EU states, therefore, it will surely be affected by a drop in demand in the single market, as well as by a tightening competition in an already very competitive market. Where countries from our region seem to improve their performance in terms of competitiveness compared to us.

All in all, the foreign trade deficit must be limited as soon as possible. Then we should move on to its reduction, based on the example of states with a similar level of development which have not adopted yet the single currency.

While we ended last year with a minus of about EUR15 billion after we went through the checkpoint at the mid-year with a result of EUR -6.5 billion, the rule of three suggests that in 2019 we will go towards a minus of EUR 18 billion, which means somewhere above the 8% of GDP forecast for the current year. That is a true test of skills for maintaining macroeconomic balances.

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