Romania’s exports decreased by 1.1% y/y to €6.26bn in October, the statistics office, INS, announced.

The annual change deteriorated marginally from -0.5% y/y in September, nonetheless remaining in the range that is consistent with the stabilisation of foreign trade activity under the difficult circumstances.

The lower grain crop and subsequent smaller exports alone can explain the decrease in September and October, meaning that filtering out the impact of the subdued output in agriculture exports actually increased in annual terms.

Furthermore, in October Romania’s exports reached their third-highest value ever, only 1.1% below the record level reached in October 2019.

The figures bode well for the October industrial output that will be revealed by the statistics office on December 14. Industrial output in the core manufacturing sector already returned to positive annual growth in September (+0.4% y/y).

Romania’s imports contracted by 2.9% y/y to €8.06bn in October, reversing the unexpected 4.4% y/y advance seen in September. The 8.8% y/y contraction in the foreign trade gap in October (to €1.80bn) is therefore not particularly relevant.

It cannot be established yet where the trade balance will stabilise in the post-pandemic period, but the demand driven by the absorption of significant funds from the European Union’s budget and the slow rate of import substitution by local production are likely to support rather wide deficits over the coming years. The European Commission expects the trade gap for goods to actually widen from 8.8% of GDP in 2020 to 10.1% of GDP in 2022.