Romania's trade deficit soars

Nov 12, 2008, 16:37 GMT

Bucharest - Romania's current account deficit grew by nearly 15 per cent in the first nine months of the year, authorities said Wednesday, the latest sign of a possible economic crunch for the European Union newcomer.

Goods imports running far ahead of exports were the main reason for the 12.7-billion-euro (16.1-billion-dollar) shortfall in the nation's broadest measure of international trade, central bank data showed.

Medium- and long-term foreign debt grew by 25.2 per cent since the start of the year, the report said.

Romania, which joined the EU in 2007, is among the ex-communist nations that has raised concern in the global financial crisis, especially after international lenders saved neighbouring Hungary from possible default.

Romania's economy, one of the fastest-growing in the region, has depended heavily on a consumer and construction boom financed by foreign banks, but growth is now slowing.

Ratings agencies have lowered their outlook for Romania's sovereign debt in recent days as worries deepen about the global slowdown's impact on eastern Europe's emerging economies.

Fitch Ratings on Monday cut its debt ratings for Bulgaria, Hungary, Kazakhstan and Romania. While upgrading its outlook for Hungary and Bulgaria from negative to stable, Fitch kept Romania at negative.

That outlook indicates concern that Romania may not be able to 'avoid a severe economic and financial crisis,' analysts at Austria's RZB Group bank said.

The ratings are designed to measure the risk of a government's defaulting on its debt.