Lazea, NBR: Romanians could eat less to reduce foreign deficit

In hindsight, Romanians should have eaten less imported food and bought fewer imported cars – the two major culprits of last year’s trade deficit, believes Valentin Lazea (photo), chief economist of the NBR (National Bank of Romania). Statistical data shows that food and cars were the commodities that generated the highest trade deficit increase for the Romanian economy. Lazea believes Romania “could survive” without these imports, and that limiting consumption would help correct the current account deficit, which is currently the economy’s No. 1 problem. The overall trade deficit went up 50% last year, whilst the food trade deficit surged 58%, and the car trade deficit by 43%. “Could Romania have lived without these food and car imports? I believe it could,” Lazea said yesterday, in a debate with banking analysts on the external deficit and how to finance it. The NBR’s chief economist says the current account deficit is mainly generated by supply-related imbalances. Last year, the deficit was primarily financed through debt, while foreign direct investments covered 42% (compared with 91% in 2006). Lazea also said the growth rate for private credit is “extremely high” and “unsustainable”, especially for individual credits in foreign currencies. According to NBR data, this figure went up 134% last year. “Such a rapid credit increase poses threats to the external deficit, financial stability and on inflation,” added the NBR official.