External trade - 2. quarter of 2005

           
External trade ¹ in the 1 ^st half of 2005, in comparison to the 1 ^st half of 2004, was accompanied by:- higher turnover by 5.8 %, i.e. CZK 98.3 billion. External trade turnover reached CZK 1 778.9 billion, exports having a prevailing part in the y-o-y increase (73.2%) and imports only 26.8%. Y-o-y increases of exports and imports were 8.6%, i.e. CZK 72.0 billion, and 3.1%, i.e. CZK 26.3 billion, respectively. Different developments in the 1 ^st and 2 ^nd quarters were behind the overall dynamics of exports and imports in the 1 ^st half of 2005. Whereas exports reported a y-o-y growth of 16.6% and imports 11.8% in the 1 ^st quarter, exports grew by only 2.1% and imports fell by 3.8% y-o-y in the 2 ^nd quarter. The development in the 2 ^nd quarter of 2005 was affected, to a certain extent, by a higher comparing base in the 2 ^nd quarter of 2004. All months of 2005 were characterised by faster dynamics of exports than dynamics of imports. Higher growth was recorded in the 1 ^st half of 2005 for external trade in terms of EUR and USD. Due to the strengthening of CZK against these currencies, exports and imports rose by 17.0% and 11.1%, respectively, in terms of EUR, and by 22.7% and 16.6%, respectively, in terms of USD.
The above-mentioned growth rates of exports and imports are (in spite of their slowdown) still favourable also in comparison to the dynamics of external trade of the EU25 states, which is documented by Eurostat data released on 20 July 2005 available for January-April 2005. In the period, EUR-based EU25 exports grew by 5.3% (EU15 exports by 4.4%) on average y-o-y and EU25 imports by 7.2% (EU15 imports by 7.0%). Exports of the 10 countries that became EU member states on 1 May 2004 were by 17.3% higher on average y-o-y and imports of these countries were up by 9.8% on average y-o-y. In the period, these countries accounted for 7.5% of EU25 total exports and 8.2% of EU25 total imports.
 
- improvement of the trade balance by CZK 45.8 billion. External trade surplus reached CZK 38.0 billion, i.e. 4.4% of total exports, which was the highest surplus attained in the 1 ^st half of the year ever recorded in the history of the Czech Republic ² . The trade balance reached surplus in all months of the 1 ^st half of 2005. By group of countries, the balance improved in trade with all the main groups of countries, with the exception of CIS ³ countries; by commodity structure, improvements were in all sections of SITC, except ‘crude materials, inedible, and mineral fuels’.- a slight weakening, in external trade by group of countries, of the shares of developed market economies in total exports and imports; however, these shares remained dominant (90.8% and 81.3%, respectively). The trend continued of strengthening exports to developing economies, European transition economies and CIS countries. The share of developing economies and other states ⁴ in imports further decreased;
               
- higher exports, as to commodity structure, in all sections of SITC. A highly above-the-average growth was recorded for ‘agricultural and food crude materials and products’ and ‘chemicals and related products’. Imports increased above the average of ‘agricultural and food crude materials and products’ and especially of ‘crude materials, inedible, and mineral fuels’ where the highest external trade deficit (which rose sharply y-o-y) was concentrated. A y-o-y fall was apparent in imports of ‘machinery and transport equipment’ and ‘chemicals and related products’.
External trade in the 1 ^st half of 2005 was affected, inter alia, by:
 
- export and import prices ⁵ . On top of effects of price development in world markets, external trade prices were significantly influenced by changes in exchange rates of CZK against EUR and USD. In January – June 2005, CZK appreciated by 7.9% against EUR and by 12.9% against USD, all on average y -o-y. Export and import prices in January-May 2005 dropped by 0.2% and 0.9%, respectively, y-o-y;
               
- foreign direct investment (FDI), i.e. its inward flows in the past period, was channelled particularly in the area of manufacturing. FDI inward flows are continuing in 2005 and reached CZK 29.5 billion in the 1 ^st quarter (according to the CNB), of which CZK 11.5 billion went in manufacturing;
               
- development of industrial production. In January-May 2005, the industrial production index reached 104.4, direct exports sales grew by 8,3% y-o-y at current prices;
               
- domestic consumer demand. In January-May 2005, retail sales were up by 2,7% y-o-y at current prices;
               
- economic situation in the world and particularly in the Euro-zone states where economic growth is still sluggish. The improvement of the Euro-zone economies in the 1 ^st quarter of 2005 was probably temporary, for GDP returned to a lower growth in the 2 ^nd quarter. There are expectations of GDP growth between 1.2% and 1.6% in the Euro-zone for 2005.
 
A closer look at external trade development in the 1 ^st half of 2005 shows that, in terms of y-o-y comparison:
 
- exports grew to all the main groups of countries (except other states). High relative increases were obvious for exports to CIS countries, developing economies and European transition economies. The biggest absolute rise in exports (albeit at a below-the-average growth rate) was reported for exports to developed market economies (CZK +53.7 billion) and to the EU25 states (CZK +47.2 billion). Favourably developing were also exports to other developed market economies (mainly to the United States and Japan). The total increase in exports to the EU25 states reflected considerably different dynamics of exports to individual states. For a number of EU25 states was characteristic above-the-average growth of exports (Slovakia, France, Poland, Belgium, Hungary, Spain and Sweden), slight dynamics were recorded for exports to Germany and Italy, and decreases occurred in exports to Austria, the United Kingdom, and especially to the Netherlands. As to further states (non-EU25), worth mentioning are higher exports to Russia, the Ukraine and Romania, and a sharp fall in exports to China;
               
- imports rose from developed market economies, CIS countries and from European transition economies; imports were down from developing economies and from other states. Higher imports from developed market economies by CZK 19.3 billion were mainly caused by higher imports from other developed market economies by CZK 10.7 billion (particularly from the United States). Increase in imports from the EU25 states was below the average and reflected different development of imports from individual states. Highly above-the-average increases were recorded for imports from the Netherlands, further from Slovakia, Poland, Hungary, Sweden and Belgium; decreases occurred in imports from Germany, the United Kingdom, Italy and France. As to further states (non-EU25), worth mentioning are lower imports from China and higher imports from Russia and the Ukraine;
               
- external trade balance improved markedly as a result of higher surplus of trade with developed market economies by CZK 34.4 billion and with European transition economies by CZK 1.5 billion, and lower deficit of trade with developing economies by CZK 13.4 billion and with other states by CZK 5.4 billion. Deficit of external trade with CIS countries rose by CZK 8.6 billion. The biggest surplus was concentrated on trade with developed market economies (CZK 116.9 billion), actually on trade with the EU25 states (CZK 156.6 billion), because the balance with other developed market economies was passive (by CZK 39.7 billion). The surplus of trade with the EU25 states was by CZK 34.4 billion up y-o-y. The biggest increases were reported for surplus of trade with Germany (by CZK 12.6 billion), Slovakia (by CZK 6.8 billion), the United Kingdom and Belgium (both by CZK 2.2 billion), deficit significantly decreased of trade with Italy (by CZK 2.6 billion) and a turn from deficit to surplus brought about an improvement of the trade balance with France by CZK 11.1 billion. Surplus of trade with the Netherlands deteriorated markedly (by CZK 13.2 billion) y-o-y. As to further states (non-EU25), high deficits occurred in trade with China (CZK 35.6 billion), although by CZK 5.8 billion lower y-o-y, and with Russia (CZK 32.4 billion), which was by CZK 6.7 billion higher y–o–y. The deficit of trade with Japan (CZK 22.8 billion) remained actually at the 1 ^st half of 2004 level.
Movements in commodity structure of external trade in the 1 ^st half of 2005, compared to the 1 ^st half of 2004, were apparent in:
 
- machinery and transport equipment by growing exports by 8.7%, i.e. by CZK 37.0 billion and thus keeping their share in total exports at the 1 ^st half of 2004 level (51.1%). Increase in exports of ‘machinery and transport equipment’ represented 51.4% of increase in total exports. On the other hand, imports of ‘machinery and transport equipment’ saw a decrease of 1.7%, i.e. CZK 6.0 billion, and a weakened position in total imports (from 42.2% to 40.3%). Surplus of external trade in ‘machinery and transport equipment’ reached CZK 114.2 billion, i.e. by CZK 43.0 billion more. Increases in surplus were obvious in trade with ‘road vehicles (including air-cushion vehicles)’ (by CZK 19.2 billion), ‘general industrial machinery and equipment’ (by CZK 14.3 billion) and ‘office machines and automatic data-processing machines’ (by CZK 9.6 billion). Surplus CZK 1.0 billion of trade in ‘other transport equipment’ in the 1 ^st half of 2004 turned into a deficit of CZK 4.6 billion a year later;
               
- manufactured goods classified chiefly by material by below-the-average dynamics of exports and especially imports, which weakened the position of these goods in total exports and imports. The surplus of the balance of trade in ‘manufactured goods classified chiefly by material’ grew by CZK 8.6 billion and made up nearly 19% of the improvement of the total trade balance;
               
- miscellaneous manufactured articles, commodities and transactions not classified elsewhere in the SITC by a higher surplus of CZK 1.4 billion thanks to a higher growth of exports (+5.2%) than imports (+3.9%). Surplus rose of trade in ‘furniture and parts thereof; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings’ and ‘prefabricated buildings; sanitary, plumbing, heating and lighting fixtures and fittings, n.e.s.’; on the other hand, deficit was up of trade in ‘footwear’ and the balance worsened  in trade in ‘articles of apparel and clothing accessories‘ (the surplus of CZK 0.4 billion turned into a deficit of CZK 1.1 billion);
 
- chemicals and related products by a high relative growth of exports (+19.4%) under a concurrent decrease in imports (-0.4%). Even though the deficit of trade in these products was down by CZK 9.7 billion, it still stood at CZK 41.2 billion. On the decrease was in particular deficit of trade in ‘medicinal and pharmaceutical products’, ‘essential oils and resinoids and perfume materials; toilet, polishing and cleansing preparations’, and ‘plastics in non-primary forms’;
               
- crude materials, inedible, and mineral fuels by the highest growth (affected by prices of mineral fuels) of imports (+22.1%, i.e. CZK 17.9 billion) among all sections of SITC, under a concurrent moderate increase (+1.3%) in exports. This trend raised the deficit in this section of SITC by CZK 17.3 billion (‘petroleum, petroleum products and related materials’ by CZK 12.4 billion and ‘gas, natural and manufactured’ by CZK 6.6 billion);
               
- agricultural and food crude materials and products by the highest growth rate of exports among all sections of SITC (+23.5%), under a concurrent highly above-the-average increase in imports (+14.7%). Higher growth rate of exports than imports slightly lowered the deficit (by CZK 0.4 billion), which was mainly affected by a higher surplus of trade in ‘cereals and cereal preparations’ by CZK 2.0 billion.

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1 All the data are at current prices. Data for 2004 are updated referring to 27 May 2005 closing date, data for January–March 2005 are updated referring to 27 May 2005 closing date, data for April 2005 are preliminary referring to 27 May 2005 closing date, data for May 2005 are preliminary referring to 28 June 2005 closing date, and data for June 2005 are preliminary referring to 1 August 2005 closing date.
2 External trade surplus CZK 13.0 billion (i.e. less than in the 1 ^st half of 2005) was reached in the 1 ^st half of 1993.
3 The Commonwealth of Independent States.
4 China, North Korea, Cuba, Laos, Mongolia, and Vietnam.
5 Import and export price indices in the CR are published later than data on external trade of the CR.