Romania: Trade balance deterioration slows

Exports expanded by 6.6% year-on-year helped mainly by the acceleration of food items and fuels, which grew 11.2% and 33.3%, respectively, compared to March 2017. Noticeable on the exports side is the sharp slowdown of raw materials, which posted meagre growth of 0.1%YoY, down from 17.4% in February and 26.4% in January. This result could be seen in conjunction with the soft patch for the Eurozone economy early in the year.

On the imports side, the growth rate of food items slowed to 5.8%YoY, from 13.4% in February and 15.9% in January. This should alleviate some of the worries mentioned by the central bank in the February Inflation Report, which underlined prices of agri-food items among risks stemming from the external environment. The deceleration of other categories is also significant, with transport equipment (which has the largest share in imports) posting a 6.1%YoY growth, down from 11.0% in February, while chemicals are up by 6.2% but still lower than 11.8% in February and 19.3% in January.

All in all, the deterioration of the trade balance seems to have ended, which is more a sign of the economy slowing down (private consumption in particular) and less of a structural improvement in the economy. We still expect the rebalancing to continue, supported mainly by the auto sector and a slowdown in private consumption.