Trade affected by strong leu

This was the pattern for the first quarter of 2007, bringing light industry exports down to 15 percent of total exports, and vehicle industry products up to 40 percent, leading the latter to become the only industry in which export dynamics are higher than imports.

Producers, already burdened by the loss of the euro to the Romanian leu, are also faced with fierce competition due to the removal of tax/ tariff protection.

“As of January 1, 2007, Romania was obliged to adopt the European customs system, which is much more restrictive in terms of extra-European imports.

The resulting difference can be seen in the textile industry, where goods imported from China have brought about a drop in domestic production,” said Cristian Parvan, Secretary General of the Businessmen’s Association in Romania (AOAR).

Textile industry exports fell by 9.7 percent in lei (4.7 percent in euro) year-on-year. This sector’s exports dropped to 14.3 percent of the total, while vehicles and transportation reached a spectacular 13.2 percent of total exports.  Furthermore, textile imports rose by 12.6 percent in Q1 2007, while exports are down 5 percent. Maria Grappini, President of the Fepaius association of textile industry owners has estimated losses of some six percent, caused mainly by the appreciation of the leu, an element exporters did not plan for.

As concerns the import structure, capital goods, raw materials, and materials required for industry share a major ratio. Common metals and products derived therefrom make up 11.2 percent of total imports, up 61.6 percent in lei (70.2 percent in euro) year-on-year. AOAR’s Secretary-General explained that the incapacity of domestic producers to satisfy investor demand has triggered a boost in imported metallurgy. As concerns orientation of international trade, Romania is closer to countries that acceded to the European Union in the first wave.

Economic growth, brought about by ample investments, and a rise in population income have modified international trade, both qualitatively and quantitatively. Exports are growing, although imports are experiencing greater dynamics than exports, reflected by the rise in the trade deficit.

Imports

In 2005, a mere 62.2 percent of Romanian imports came from the EU. In the first four months of 2007, these have increased by more than 10 percent year-on-year, reaching a level close to that of countries that became EU member states in 2004.