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China, Germany, and Poland Account for Half of Romania’s Trade Deficit

09Principalele tari partenere ale Romaniei in comertul exterior 2023 1 - Moldova Invest

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China, Germany, and Poland Account for Half of Romania’s Trade Deficit

According to INS data, the structure of partner countries with which Romania conducted goods exchanges last year lists Germany, Italy, France, Hungary, and Bulgaria at the top for exports (the three largest EU economies and neighboring Union countries), and Germany, Italy, Hungary, Poland, and China for imports.

Relevant for understanding the directions to balance bilateral foreign trade is the hierarchy of countries with which Romania has a negative balance in mutual goods deliveries. Last year, there were ten countries with which the bilateral trade deficit exceeded the threshold of 1 billion euros.

Additionally, there are five other states with which Romania has a deficit exceeding 400 million euros, including Belgium, the Czech Republic, Slovakia, and Ireland, which seem to be part of the “landscape.” However, there is also a more difficult-to-explain Balkan appearance, Greece, with which Romania achieves only a 60% coverage rate, similar to the Netherlands.

Approximately half of the trade deficit resulted from economic relations with China, Germany, and Poland (about 14.4 billion euros out of a total of 28.9 billion euros). Noteworthy is the very low coverage rate with the world’s main partner (only 12.7%), and the fact that imports from Poland (as well as from Hungary) were larger than those from China.

Just a decade ago, Turkey was in a chronic deficit situation with Romania, but it has significantly caught up and now has a surplus of over 3.3 billion euros, substantially surpassing those achieved by Hungary and Kazakhstan (both at 2.6 billion euros).

While the situation with developed economies like Austria and the Netherlands is not surprising, the fact that Romania has a negative result exceeding 1.8 billion euros with its southern neighbors across the Danube, much higher than with Italy (1.1 billion euros), should raise concerns.

Somewhat paradoxically, Romania has much higher exports and significantly higher coverage rates with its main trading partners, Germany (82.0%) and Italy (89.6%). Furthermore, Romania has surpluses with countries like the United Kingdom (about 1.62 billion euros), the USA (+774 million euros), and France (+689 million euros). Among these are also the eastern neighbors from the ex-Soviet space, Ukraine, and the Republic of Moldova, each near the 1 billion euro mark.

The situation suggests that Romania has competitive products to sell in markets where prices are higher, and it offers good products at a more reasonable cost, or in markets newly oriented towards EU accession. However, Romania performs worse when the competition within the Union on the quality/price ratio is tighter, including in its own consumer market, where it is successfully competed with by fellow former Eastern Bloc countries.

 

 


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