Romania’s trade deficit remained high in 2024

In 2024, the Romanian trade deficit more than reversed the gains made in 2023 on the back of visibly stronger internal demand, which stimulated imports. This happened mostly because the supply side of the economy likely did not have the firepower, the technology or the time to adapt to the simultaneous growth of both private consumption and public investments. As such, the benefits of last year’s strong activity largely dissipated externally through imports, while the struggles of the European industrial sector weighed on exports. Putting some numbers to it, the trade deficit worsened from EUR29bn in 2023 to EUR33bn in 2024, a 15.3% increase, which more than reversed the 15% gain made over 2023. This leaves the trade deficit at 9.5% of GDP, noticeably weighing on the current account.

Looking at the breakdown, the largest deficit remains in the chemicals sector (EUR13.5bn), followed by manufactured products other than cars (EUR8.9bn). Apart from the negligible surplus in raw materials, the balance in every other category was deep in negative territory.

Turning to the composition of exports and imports, some facts stand out:

• The machinery and transport equipment sector continues to dominate the export structure (47% of the total), followed by the rest of the manufacturing sector (29% of the total), leading to a total of 76% of total exports.
• Compared to last year, the share of machinery and transport equipment in total exports has grown 2.2 percentage points, while the other manufactured products’ share shrank by 1.3ppt.
• This was likely influenced by the sales performances of the two local big automotive producers (Dacia and Ford), as well as the struggling demand for other products, driven by the weak performance of the European economy.
• On imports, machinery and transport (36% of the total) and other manufactured products (29%) dominate the dynamics as well.
• Nominally, Romania still posts a trade deficit in machinery and transport equipment, with exports summing up to EUR43bn and imports at EUR45bn.

Looking ahead, there is no easy way to solve the persistent trade deficit. We expect private consumption growth to moderate but still remain at healthy levels in 2025, which should continue to keep import demand elevated in the short run.

To fix the deficit in either machinery and transport equipment or manufacturing more broadly, the economy would need what economists call a “taste shock”. This would entail Romanian consumers suddenly favouring domestically-produced cars over foreign ones, or choosing locally-produced electronics like TVs and mobile phones for their daily needs. Both scenarios, however, remain unlikely.

Moreover, with another year of large-scale public investments foreseen ahead - the largest in this investment cycle if it goes according to plan - it is unlikely that in just one year the local supply side will be able to fulfil the specific needs of such investments (mostly engineering inputs/machines or some raw materials).

Instead, there could be more scope to rebalance the chemicals deficit in the short-to-medium term, especially if it fits into the context of a broader industrial strategy. The food trade balance is also key to watch.

On the external front, we don’t expect any major boosts to external demand. Our team continues to expect the eurozone economy to maintain a modest growth rate of 0.7%, meaning that Romanian exports are unlikely to face a sudden increase in demand from the main trading partners.