Field: Economic development and infrastructure

Subfield: Trade

Details:

This indicator calculates the difference between exports and imports, relative to the nominal GDP of the period. Significant GDP dependence on external trade factors (import/export) is a clear sign of vulnerability. When trade deficit increases significantly relative to GDP, pressure amounts on the currency market (the exchange rate falls if the currency demand is higher than the currency offer obtained through exports). If the international reserve is insufficient, long-term pressure on the exchange rate can be transformed into a significant crisis, with direct consequence on the welfare of the nation. In the last decades, Romania’s current account balance has been negative most of the time; Romania is the only country in the region with negative current account balance in periods of economic growth (in 2007 it reached a record 13% of GDP, in 2015 it was 1.18% of GDP, on the rise). The imbalance between imports and exports is explained by the low degree of exported goods processing, massive imports of technology and raw materials (components, subassemblies), specific to a lohn economy, and low, decreasing value added (especially in industry).