ECONOMY

Romania to set up export promotion council soon

BUCHAREST (Reuters) – EU aspirant Romania will set up an export promotion council to curb a bulging current account gap and help local firms to compete in the eurozone, the Economy Ministry said yesterday. The Balkan country, which hopes to join the EU in 2007, promised the IMF to cut the current account gap to 5.5 percent of GDP after it surged to 5.8 in 2003 due to booming imports. Romania saw a robust export-led recovery in recent years after a severe recession in the late 1990s but needs annual growth rates of 5 to 6 percent to get closer to the EU. «As Romania’s economy becomes more open, connected and therefore vulnerable to world market trends, we need a mechanism to help promote exports that is in line with the EU (laws),» Deputy Economy Ministry Eugen Dijmarescu told a seminar. He said the ratio of Romanian overall imports and exports to the GDP – an indicator reflecting how open an economy is – grew to 85.1 percent in 2003 from 60 percent in 1999. The government will approve in April the creation of a private-public partnership that will be called The Export Council, said Dijmarescu. «The council is the answer to medium-term challenges Romania as an exporter will face after it joins the single (EU) market,» he said. «It will spot business niches and help Romanian exporters keep track of global and regional trends.» Romanian exports rose 11.3 percent in the first two months of this year to 2.7 billion euros from the 2003 period, with 69 percent going to EU states. But the January-February trade gap was wider at some 350 million euros from 221 million in the same period a year ago. Dijmarescu said booming imports were partly due to the steep rise of domestic producer prices, which have soared by more than 20 percent every year since 2000, compared with increases of up to 9 percent in the mostly ex-communist states joining the EU in May. «This explains the fall in competitiveness of Romanian products and why imports were more attractive,» he said. An appreciation in real terms of Romania’s leu currency versus a euro-dollar basket combined with difficulties that Romanian exporters face when seeking hard currency financing from banks had also worsened trade figures, he said. The exchange rate plays a disinflation role in a country which is struggling to cut inflation – among the highest in the region – to 9.0 percent this year from 14.1 percent in 2003.