BUCHAREST, May 11 (Reuters) - Romania's trade gap shrank 61 percent on the year to $2 billion euros in January-March as imports fell faster than exports, cementing expectations of an economic contraction in the first quarter.
Data from the National Statistics Board (INS) showed on Monday March's trade deficit was 566.1 million euros.
The INS said CIF (cost/insurance/freight) imports fell 35.4 percent year-on-year to 8.56 billion euros, while exports dropped 19.4 percent to about 6.6 billion euros.
'The trade data are favourable to the adjustment of the shortfall but on the other hand they send a clear signal that consumption is dwindling, which will result in an economic contraction in the first quarter,' said Rozalia Pal of UniCredit Tiriac Bank.
Romania was the European Union's fastest-growing economy early last year but with domestic lending frozen, foreign demand hurting exports and expansive fiscal policies it was forced to seek foreign aid to prevent a financing crisis.
The International Monetary Fund, the European Union and other financial institutions agreed to lend the relatively poor Balkan state 20 billion euros on the condition that it reforms its creaking public finances and reins in wage spending.
But while analysts said the loan will help Romania avoid an immediate meltdown, it was not going to help it avoid recession this year.
Romania's vast trade gap last year put it among the most vulnerable states in central and eastern Europe in terms of financing risks. But the shortfall is seen narrowing sharply this year as the global crisis cuts demand.