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Romanian nine-month trade gap widens 46% on imports

Romania's trade deficit widened in the first nine months as shoppers spent increasing disposable cash on more expensive imports and exporters sold lower-cost items.

The deficit, including the cost of freight and insurance for imports, widened 46% to €9.6 billion ($12.3 billion), the National Statistics Institute said in an e-mail today. The September trade deficit narrowed to €1.18 billion from €1.39 billion in August. “It doesn't bode well for the current-account deficit,” ING Bank Romania chief economist Florin Citu said in a phone interview today. “While import growth is maintaining its pace, export growth is slowing down.” Romanians are buying more imports, including expensive cars, clothing and household goods, as wealth and investment increase before the country joins the European Union on Januar 1. Exports, although growing, are mostly lower priced, such as the Dacia SA Logan, one of Europe's cheapest cars. Imports have become cheaper for Romanians as the inflow of cash from Europe and elsewhere strengthens the local currency. Lower taxes and increasingly available bank loans have also given Romanians more cash to spend. Imports in the first nine months rose 25% to €28.7 billion and exports increased 16% to €19.1 billion. Imports in September rose 19% from the same month last year to €3.38 billion and exports increased 6.1% to €2.2 billion.

Exports of cars and transport material and cars rose 54% to €1.8 billion while imports in the category increased 11% to €3.1 billion. “While we see that transport exports are growing very fast in units, their value is lower than imports,” Citu said. “We're exporting Dacia Logans and importing BMWs.” Imports from the EU rose 24% in the Januar-September period and accounted for 62% of imports. Exports to the EU rose 16% and accounted for 68% of the total. When the costs of freight and insurance are excluded for imports, the nine-month trade deficit widened 54% to €7.4 billion, the statistics institute said. The trade deficit is the main reason for the country's widening current-account shortfall. The International Monetary Fund and the EU have called on Romania to curb the deficits and keep consumer prices under control. The current-account gap widened 51% in the first eight months of the year to €5.92 billion based on preliminary data, the central bank said on October 24. (Bloomberg)