Thursday, March 12, 2009

Romania Jan trade gap shrinks 60.3 pct

BUCHAREST, March 12 (Reuters) - Romania's trade deficit shrank 60.3 percent on the year in January, in what analysts said signalled an adjustment of its main economic vulnerability.

Data from the National Statistics Board (INS) showed on Thursday January's trade gap stood at 576.4 million euros ($736.5 million).

Romania has gone from being the European Union's fastest-growing economy last year, attracting billions of euros in foreign investment, to one of its most vulnerable.

The vast trade gap, which reached 22.52 billion euros in 2008, puts Romania among the most at risk in central and eastern Europe in terms of financing.

But the shortfall has been adjusting for months as recession deepened around the world and analysts said the import-export gap would continue to narrow.

The INS said CIF (cost/insurance/freight) imports fell 37.4 percent year-on-year to 2.5 billion euros, while exports dropped 24.3 percent to 1.9 billion euros.

Romania's leu showed little reaction after the data release, trading at 4.278 per euro at 0827 GMT.

Earlier this week, Romania became the third European Union member to ask the EU for an IMF-led bailout due to a dearth of foreign financing that has crippled growth, raised the risk of default and sparked public unrest across the bloc's eastern wing.

'The adjustment is ongoing and is triggered by the leu weakening and falling external and internal demand,' said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

'I see no reason why the perception on Romania should not improve, as the adjustment happens and financing problems are on their way to being solved through the aid package.'

An International Monetary Fund team arrived in Bucharest on Wednesday for a two week assessment and possible loan talks, having also taken the leading role over the EU in rescue packages for Hungary and Latvia.

No comments: