The local producers’ ability to cover consumer demand has been eroded in the first quarter by the labor cost pressure and competition from imports at very low prices, according to Romania’s National Bank (BNR).

Internal demand grew by 7.8% year-on-year in the first three months of 2016, due to higher household consumption amid wage increases made during the previous year and the downward trend in consumer prices. Moreover, consumption appetite has been stimulated by a series of measures adopted by large retailers, such as the expansion of distribution networks and a growth in the number of promotions.

The main segment where the trade balance worsened in the first quarter is the consumer goods sector, including motor vehicles. This occurred as the slight recovery in the volume of exports was completely offset by the expansion of imports, according to BNR.

editor@romania-insider.com