Romania’s exports increased by 5.2% y/y to EUR 12.8bn in the second quarter of 2014, marking a slower growth rate compared to the 7.6% annual advance in the first quarter. In the last 12 months ending June, exports rose 10.7% y/y to EUR 51.37bn.

In January-June, the exports rose 7.6% y/y to EUR 25.52bn. The second-quarter performance thus marks a visible slowdown – while any future growth is subject to serious concerns since it largely depends on the dynamics of the major European trade partners. As in the past, a slowdown in the activity of European industrial groups has a major impact on their Romanian subsidiaries.

GEOGRAPHIC PATTERN. The exports to countries outside the EU notably contracted by 1.9% y/y in Q2 thus reversing a pattern of diversification pursued by exporters and the government in an effort to decrease the dependency on the EU and increase exposure to fastest growing markets. Exports to EU countries were 72% of the total in Q2, compared to 70% in Q2 last year. On the upside, a rising demand still pushed up exports to EU countries by 8.2% y/y in the quarter.

PERFORMANCE AGAINST FORECAST. The state forecast body expects the country’s exports to rise by 7.3% y/y in 2014 – and similar growth rates in the coming three years, under its Convergence Programme drafted in May. While this year’s performance might still be in line with the expectations, future growth depends on external drivers [mainly the EU's economic recovery] but also on domestic drivers. Even a moderate currency strengthening could put at risk the exporters’ financials, the central bank has warned recently. The statement was followed by another interest rate cut. The new central bank managing board, to take office this autumn, is however broadly expected to favour the local currency appreciation at the expense of price stability – bankers commented.