By Irina Savu
Oct. 12 (Bloomberg) -- Romania’s trade deficit narrowed in August as a weaker currency and slowing wage gains discouraged people from buying imports.
The gap narrowed to 731.7 million euros ($1.07 billion), from 1.8 billion euros in August last year, the Bucharest- based National Statistics Institute said in an e-mailed statement today. The deficit widened from a revised 530.4 million euros in July.
Romania’s leu has weakened about 12 percent in the past 12 months against the euro, making imports more expensive, as households and businesses adjust to slower wage growth and declining asset values. Romania, which together with Bulgaria joined the European Union in 2007, is relying on an international bailout to avert a default after its economy plunged into recession.
The global economic crisis has cut international demand for Romanian goods, reducing exports by 18.2 percent on the year in August to 2.17 billion euros while sales abroad declined 19.1 percent in the first eight months, according to the institute.
Romanian imports declined 35.5 percent in August to 2.9 billion euros, and dropped 36.6 percent in the first eight months, the statistics institute said.
The government in April obtained a 20 billion-euro package of loans led by theInternational Monetary Fundcurrent account and budget deficits. The central bank says the economy will shrink 8.5 percent this year after growing 7.1 percent last year, the fastest pace in the EU.
Romania’s central bank estimates the current account gap, of which the trade deficit is the main component, will narrow to about 6 percent of gross domestic product this year from about 13 percent last year because of a weaker currency. Central Bank Governor Mugur Isarescu also predicted on Sept. 9 that a current-account gap smaller than 8 percent of GDP is “sustainable.”
The trade data include the cost of freight and insurance for imports. The institute doesn’t report figures excluding those costs.
To contact the reporter on this story: Irina Savu in Bucharestisavu@bloomberg.net. and the European Union to finance its