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UPDATE 1-Romania 11-mth trade gap widens, import growth slows

Published 01/09/2009, 04:16 AM
Updated 01/09/2009, 04:24 AM

(Adds details, analyst quote)

BUCHAREST, Jan 9 (Reuters) - Romania's January-November foreign trade deficit widened by 7.2 percent on the year, although latest monthly data on Friday showed an import growth slowdown, seen as key to curbing the external deficit.

The trade gap, 21 billion euros ($28.7 billion) for the 11-month period, is a major headache for Romania, making it one of the most vulnerable economies in central and eastern Europe in terms of financing risks, heightened by the global downturn.

For the month of November alone, the trade deficit narrowed to 1.68 billion euros from 2 billion euros in October.

Analysts say the high external gap is a key reason stopping the central bank from joining a regional trend in monetary easing.

But a sharp decline in the leu in recent months, driven in part by concerns over Romania's economic imbalances, has started to eat into import growth.

Data from the National Statistics Board (INS) showed that CIF (cost/insurance/freight) imports rose 12.2 percent year-on-year to 52.5 billion euros, while exports were up 15.9 percent to 31.6 billion euros.

"The leu depreciation has helped and we can really see this looking at the import growth's sharp fall," said Nicolaie Alexandru-Chidesciuc, senior economist at ING Bank in Bucharest.

"A beneficial impact on trade figures has also come from lower oil prices on world markets."

Export growth also slowed as global demand dwindles but it was faster than import growth in the first 11 months of 2008, signalling possible narrowing of the trade gap.

Both import and export growth fell by around 3 percentage points in November, when the leu currency lost around 4 percent against the euro. "Normally a weaker leu would have boosted exports ... but a negative impact on exports reflected a fall in external demand due to the world financial crisis," said Chidesciuc.

The Romanian leu extended early losses after the data release to hit a fresh record low against the euro at 4.2025 . (Reporting by Radu Marinas; editing by Stephen Nisbet)

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