Romania's Trade Deficit: Navigating Volatility in Energy and Beyond

Romania's trade deficit has surged to alarming levels, reaching 10% of GDP in early 2025, driven by structural imbalances in non-fuel sectors and declining export competitiveness. While falling oil prices have offered temporary relief, deeper issues in sectors like chemicals and food imports threaten to prolong the deficit's expansion. Investors seeking opportunities in this environment should prioritize domestically oriented industries and companies insulated from global energy price swings, while avoiding overexposure to traditional export-driven sectors.

The Deficit's Dual Dynamics: Energy and Non-Fuel Drivers

Romania's trade deficit hit EUR 3.14 billion in April . Exports fell 5.4% year-on-year to EUR 7.87 billion, with declines in both EU (-4.4%) and non-EU markets (-7.2%). Imports, however, rose 0.4% to EUR 11.01 billion, fueled by non-EU purchases (+6.6%). Cumulatively, the deficit for January–April 2025 reached EUR 11.61 billion, a 24.8% increase from the same period in 2024.

The deficit's expansion is not merely an energy story. Non-fuel sectors now dominate the imbalance, accounting for 82% of the total deficit in 2025. Chemicals (37%), raw processed materials (22%), and food (15%) are the largest contributors. For instance, net imports of "other manufactured goods" surged 131% year-on-year, while food imports rose 40%, highlighting systemic overreliance on foreign supply chains. Even as fuel imports grew 31% in early 2025, the non-fuel sectors' structural weaknesses—such as weak export competitiveness and supply chain inefficiencies—remain the primary concern.

Declining Oil Prices: A Temporary Crutch, Not a Cure

The post-2022 energy price shocks highlighted how volatile oil prices can amplify the deficit. In 2023, energy imports pushed the deficit to 11.3% of GDP. However, as oil prices retreated in 2024–2025, the deficit-to-GDP ratio eased to 9.1% by May 2024. This suggests that lower energy costs can provide short-term relief.

Yet, this respite is limited. Non-fuel sectors' deficits are growing faster than energy-related imbalances. Even if oil prices stabilize at lower levels, the trade gap would still expand due to rising imports of chemicals, food, and machinery. For example, Romania's food imports grew 40% in early 2025, driven by domestic demand for processed goods it cannot produce cost-effectively. This underscores the need for structural reforms beyond energy price trends.

Structural Weaknesses in Exports and EU Reliance

Romania's export sector struggles with overreliance on EU markets, which accounted for 76% of total exports in early 2025. Weak performance in non-EU markets (down 7.2% year-on-year) reflects a lack of product differentiation and competitiveness. Sectors like chemicals and machinery—critical for export growth—are hampered by outdated infrastructure and supply chain inefficiencies. Meanwhile, the EU's slowing growth (projected at 0.9% in 2025) threatens to further depress export volumes.

Investment Opportunities: Focus on Domestic Sectors

Investors should avoid traditional export-driven industries and instead target sectors insulated from trade imbalances and energy volatility:

1. Tech and Digital Infrastructure: Romania's tech sector is booming, with companies like Bitdefender and UiPath leading global cybersecurity and automation markets. Domestic tech firms benefit from low labor costs and EU-funded innovation hubs.

2. Renewables and Energy Transition: The government's EUR 2.1 billion fiscal package includes subsidies for green projects. Solar and wind energy companies, such as Neoen Romania or local utilities, offer long-term upside as the country aims to reduce fossil fuel dependency.

3. Consumer Staples: Domestic demand remains robust, driven by strong private consumption. Companies in food production (e.g., Danone Romania) and healthcare (e.g., Teva Romania) face less export risk and benefit from import substitution trends.

Risks and Cautionary Notes

• Overexposure to Non-Fuel Imports: Avoid companies reliant on imported raw materials (e.g., chemicals, machinery).
• EU Market Dependency: Sectors tied to EU demand, like automotive parts or construction materials, face downside risks from slower EU growth.
• Policy Uncertainty: Romania's public debt is projected to hit 54% of GDP by 2025, raising concerns about austerity measures that could dampen domestic demand.

Conclusion

Romania's trade deficit is a symptom of deeper structural issues that declining oil prices alone cannot resolve. Investors should focus on domestically oriented sectors—tech, renewables, and consumer staples—that thrive despite trade imbalances. Avoid traditional exporters and industries vulnerable to non-fuel import surges. While the deficit's widening poses near-term risks, strategic bets on resilience-driven industries could yield outsized returns as Romania navigates its economic transition.

Final Take: Shift capital toward companies with domestic revenue streams and minimal exposure to global trade cycles. The path to profit lies in Romania's homegrown strengths.