After 2019, the darkest year for Romanian exports in the post-crisis period of 2008-2009, the first year of the pandemic (2020) was even more difficult in terms of the evolution of the country’s trade balance: covid-19 eroded exports by 9.9% compared to the previous year.
By Claudiu Vrinceanu
Romania remained the only country in the region to have a large trade deficit in 2021. Despite the economic recovery measured by GDP growth, export growth was lower than import growth. The chronicity of the foreign trade deficit led to a result of -22 billion euros.
This trend was global and it was due to the crisis generated by the covid-19 pandemic. In fact, exports are still struggling regionally. Romania’s trade deficit also increased last year and export growth in 2021 reached 19%, mainly due to the base effect in the context of the 2020 disaster. in 2022? What are the trends that dominate international trade today and how do they impact Romanian companies and the decisions of our business leaders?
EXPORT GROWTH WILL EROD IN 2022
According to Eurostat data, Romania’s economic position will remain weak in the regional context, mainly due to the fact that Romania was the only country in the region to have a large (and growing) trade deficit in 2021. Bankers already anticipate a slowdown in annual export rates in 2022 to levels well below 10%. The main reasons are the disappearance of the base effect created in 2020 by the implementation of the restrictions and the persistence of the health crisis, coupled with the possibility of a serious climatic deterioration of the regional markets. The downward trend in export growth in 2022 is global. For example, German exports are expected to increase by 4% this year compared to last year, and therefore half as much as last year, according to the Federation of German Industries (BDI).
EXPORT PROMOTION POLICY STILL PROBLEMATIC
Romania may have once had grand plans when it comes to export promotion policy, but today the issue has largely been dropped. By comparison, other European countries are strengthening the role of economic diplomacy and Western authorities are offering many programs and measures to support exporters. For example, instead of the existing export promotion program, where many problems related to internal controls were discovered, no new solution was proposed last year in Romania to reform the export support system. . Regardless of the good intentions of the Romanian government, 2022 will see less support offered to Romanian companies for internationalization, due firstly to the heavy reorganization and creation of new ministries in the economic sector – a process that lasts between 3 and 6 months – and secondly, due to the limited budgets available. But at the macro level, a structural recovery of the economy which passes not only through quantitative growth but also through an improvement in competitiveness is necessary to avoid losing out to other markets.
MORE MONEY ON THE TABLE FOR GLOBAL COMPANIES
The value of venture capital and business angel funding granted to Romanian tech companies doubled in 2021 compared to 2020, which also significantly increased the number of global initiatives carried by national startups.
Investors are now looking for the next Romanian unicorn and they say we are at a historic moment that we have never seen before. Forecasts are optimistic about the private capital that will finance the expansion of innovative Romanian companies in 2022.