Decreasing trade deficit
In Romania, the trade deficit decreased at the beginning of this year. On the other hand, the budget deficit has increased.
Mihai Pelin, 11.04.2023, 14:00
Romania’s trade deficit was reduced by 5% in the first two months, according to the National Institute of Statistics, and the trend is likely to be maintained in the next period as well, against the backdrop of increasing exports, and especially of decreasing prices for imported energy, economic analysts estimate. The drop in the trade deficit comes after last year it had increased significantly by 44% as compared to 2021. In the first two months of the year, the value of Romania’s exports exceeded 15 billion Euros, 9% more than in the same period of 2022, and imports totaled over 19.4 billion Euros, increasing by only 5.4%. Hence a trade deficit of almost 4.4 billion Euros, lower by 232 million Euros compared to the January-February period of last year. Financial analyst Adrian Codirlaşu says that the deficit reduction is mainly due to developments in the energy sector.
Adrian Codirlaşu: Energy prices have fallen, Romania imports energy, therefore I think that the lower prices come from the energy sector. For this year, we will continue to pay less for imported energy than last year, and this will be seen in the value of imports. Exports will probably continue to grow, and we will have a slightly lower trade deficit and implicitly current account deficit than last year. If last year we had a deficit of more than 9%, this year we may reach a deficit of around 8% or even slightly below 8%. The deficit is also helped by the slight increase in the GDP.
According to specialists, to further reduce the current account deficit, it is necessary to reduce the budget deficit as well as to encourage production in sectors in which Romania has a tradition, but which are now producing a trade deficit, such as the food and chemical industries. On the other hand, the Prime Minister Nicolae Ciucă has recently said that the Government must start saving due to the large budget deficit. He asked the ministers to find solutions to reduce expenses and reiterated that there was no question of massive layoffs or pay cuts.
Nicolae Ciucă: We have asked each budget administrator to take measures and make more balanced, more responsible expenses, because, unfortunately, at the end of the first quarter, we have a budget deficit of 1.4% at the level of the Government. I specified very clearly, including in writing, when I asked them to come up with proposals for reducing these expenses, that salaries and investments should not be affected.
The prime minister also added that in 2022 the economy and the state budget registered a positive evolution, based on substantial nominal increases, with foreign investments and a record European funds absorption rate, but, this year, both Romania and the other European countries, feel the dire consequences of the war in Ukraine, of inflation and the logistical problems created on the supply chains. (LS)
