Monday, November 12, 2007

Romania's Trade Gap Widens as Leu, EU Entry Increase Imports

By Adam Brown

Nov. 9 (Bloomberg) -- Romania's trade deficit widened in September as a stronger local currency and the elimination of many trade barriers boosted imports.

The deficit widened to 1.69 billion euros ($2.49 billion) from 1.175 billion euros in September of last year, the National Statistics Institute said in an e-mail today, based on preliminary data. The deficit was lower than a revised gap of 1.797 billion euros in August.

Increased investment since Romania joined the European Union on Jan. 1 has strengthened the local currency, making imports cheaper. The leu gained 18 percent against the dollar and 3 percent against the euro in the past year. Romania also eliminated many tariffs and other trade barriers when it joined the EU.

The trade deficit is the major factor widening Romania's current-account gap. Standard & Poor's this week lowered its outlook on Romania's sovereign credit rating for a second time since April, citing the current-account deficit.

Imports in September rose an annual 22.5 percent to 4.14 billion euros, while exports increased 11.1 percent to 2.45 billion euros. Imports from other EU countries rose 24 percent as exports to the bloc increased 9.5 percent.

In the first nine months of the year, the trade deficit widened to 15.07 billion euros from 9.55 billion euros in the same period of last year. Imports increased 27 percent and exports rose 11.7 percent.

The data reported today includes the cost of freight and insurance for imports. The institute didn't report figures that subtract those costs.

To contact the reporter on this story: Adam Brown in Bucharest at abrown23@bloomberg.net

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