According to data released by Eurostat, half of the EU member countries concentrate 70% of Romania’s deficit in foreign exchanges registered in 2018, which reflects a major competitiveness deficit.
Somehow surprisingly, the top two positions in the ranking of countries with which we have a negative balance are, by far, Hungary and Poland, followed at a big distance by the Netherlands and Austria.
Behind them, Belgium came a long way from behind and surpassed our main trade partner, Germany, while the results with the Czech Republic and especially Spain have deteriorated at a worrying pace from one year to the next. The only notable positive developments have been recorded with Slovakia and our second largest trade partner, Italy.
So, not so much Western economies cause us problems, but rather those former colleagues of the socialist bloc, compared to which we can only export at worryingly low proportions compared to imports (51.1% coverage ratio with Hungary and only 42.9% with Poland).
Moreover, we found ourselves on an increasing tendency to register a deficit with Bulgaria, a country over which we traditionally had a surplus (from the small deficit of EUR 54.1 million in 2017 to EUR 195.6 million in 2018).
*- Ranking of main foreign trade partner countries from the EU in 2018 (million euros)
- Country FOB export CIF import Balance % of deficit FOB/FOB coverage
- Germany
- Italy
- France
- Hungary
- UK
- Bulgaria
- Poland
- Spain
- Czech Republic
- The Netherlands
- Slovakia
- Austria
- Belgium
- Greece
- Total foreign trade
*
In the West, smaller economies are those making us bigger problems, and with this view it is worth emphasising the significant deficits with The Netherlands (about –EUR 1.7 billion at a level of export coverage ratio of imports only slightly above 50 percentage points), Austria (EUR 1.1 billion and 60%, respectively), plus Belgium (about – EUR 800 million, or about five times more than its neighbour France, at a coverage ratio of 62%).
Where deficit problem lies
In order to clarify directions where we should act, beyond the general considerations, it is worth selecting and clearly mentioning top 10 countries with which we have a deficit and with four of which we have a deficit of over one billion euros, each. These countries concentrate over three-quarters of Romania’s trade deficit (76%).
*
- Top 10 EU countries with which we have a trade deficit
- Country Balance 2018 Balance 2017 Change Share of deficit
- Hungary
- Poland
- The Netherlands
- Austria
- Belgium
- Germany
- Czech Republic
- Spain
- Slovakia
- Italy
*
To be noted, last year, trade balance with a country of major importance for our foreign trade, France, went from the positive to the negative range (from + EUR 231.6 million in 2017 to –EUR 168.8 million in 2018) and the consequence was that only this change from plus to minus has generated almost one fifth of the increase in the trade deficit.
Only better results in relation to Slovakia and Italy have significantly limited the worsening of the situation overall. Although the negative result with the first ten partners from the EU has increased by about one billion euros or about half of the trade deficit increase in 2018, the growth rate was slightly below 10% that is lower than the overall deterioration, of about 17%.
Finally, it is worth mentioning the important negative effect of Brexit for Romania, because the UK was the only large European state with which we had not only a consistent surplus but also massively increasing (from EUR 873.3 million in 2017 to EUR 1,257.3 million in 2018, that is, an additional amount of nearly EUR 400 million or 44% from one year to another – basically, we could call it the „Duster effect”)
