Romania’s trade deficit (chart) narrowed by 15% year on year to €28.9bn in 2023 and the gap-to-GDP ratio narrowed from 11.9% in 2022 (the widest value in the past decade) to 9.1% in 2023 (preliminary bne IntelliNews estimate), according to data published by the statistics office INS.

But December showed a different picture: the widest trade gap (nominally) in the past decade, as well (€3.43bn, +11% y/y).

Whether the sudden deterioration of Romania’s external balance in December heralds a change in trends will be shown in the coming months. 

But it is already clear that the improvement in the trade balance last year was mainly the result of thinner trade with crude oil, natural gas and petroleum products. The exports of mineral fuels contracted by 29% y/y, while imports shrank by 32.5% y/y. The 8.9% lower imports of chemical products (where Romania posts a massive trade gap) contributed as well. 

Another visible trend not challenged by foreign trade in December refers to the stagnation displayed by total exports. The 1.3% y/y advance in exports (to €93.1bn in 2023) may partly reflect the lower price of commodities – but the export-to-GDP ratio dropped to 29% in 2023 from 32% in 2022. 

The ratio is the lowest since the COVID-19 crisis hindered foreign trade globally. The weakness demonstrated by Romania’s exports rather reflects the industrial slowdown in the country’s main trade partners also visible in the industrial slowdown at home. Romania’s manufacturing output for the 12 months to November 2023 (latest data available) contracted by 4.8% y/y.

Romania’s imports contracted nominally by 3.2% y/y to €122.0bn in 2023. The lower energy prices, subdued industrial activity and softer demand for consumption have all contributed.

In December, Romania’s exports contracted by 8.3% y/y to €6.1bn, while imports reduced by only 2.2% y/y to €9.6bn. The deficit thus widened by 11% y/y to €3.4bn.