External trade - 2. quarter of 2007

 
In the first half of 2007, external trade ¹ recorded a double-digit growth again; the turnover was an all-time high and grew by 15.4% year-on-year. In the history of the Czech Republic, 2007 is the first year in which external trade reached a surplus in each of the first six months.
 
In the first half of 2007, in comparison to the first half of 2006:
           
- increase in exports was by 1.5 p.p. higher than increase in imports - exports grew by 16.1% year-on-year and reached CZK 1 207.6 billion, imports rose by 14.6% year-on-year and stood at CZK 1 153.9 billion. The increases of exports and imports accounted for 53.2% and 46.8% respectively of the year-on-year growth of external trade turnover. Due to the appreciation of CZK against USD and slightly against EUR, exports and imports in these currencies grew faster - exports and imports in USD by 26.9% and 25.3% respectively, exports and imports in EUR by 17.5% and 16.0% respectively;
 
- external trade balance reached a surplus of CZK 53.8 billion (the rate of coverage of imports by exports was 104.7% in comparison to 103.3% in the first half of 2006), which was by CZK 20.2 billion more year-on-year. A significant part of the trade surplus in the first half of 2007 was produced by favourable terms of trade. By group of countries ² , trade surplus rose with EU27 member states (by CZK 35.0 billion), trade deficit with non-EU countries deteriorated by CZK 14.8 billion (surplus with the European transition economies decreased by CZK 2.7 billion, trade deficit with CIS ³ countries improved by CZK 16.3 billion and deteriorated with other states ⁴ by CZK 22.7 billion and with developing economies by CZK 5.3 billion). Trade surplus with EU states compensates in the long term for the trade deficit with non-EU countries (mainly with China and Russia). By commodity section, the trade balance improved year-on-year due to a CZK 19.6 billion decrease of deficit in ‘crude materials, inedible, and mineral fuels‘, a CZK 16.2 billion increase of surplus in ‘machinery and transport equipment’ and a CZK 3.8 billion increase of surplus in ‘miscellaneous manufactured articles‘; on the other hand, trade balance deteriorated due to a CZK 10.5 billion decrease of surplus in ‘manufactured goods classified chiefly by material’, a CZK 7.8 billion increase of deficit in ‘chemicals and related products’ and a CZK 0.9 billion increase of deficit in agricultural and food crude materials and products’;     
- by group of countries,  the share of EU27 member states strengthened in both total exports (85.8%) and total imports (71.7%). A positive feature was that the shares of the EFTA ⁵ states and other states in total exports moderately increased. With the exception of CIS countries, EFTA states and other developed market economies ⁶ , imports from all the remaining groups of countries grew, most markedly imports from other states, followed by imports from developing economies;
- by commodity section, the shares of ‘machinery and transport equipment’ (53.6%) and ‘manufactured goods classified chiefly by material’ (21.2%) in external trade rose at the expense of all the other sections of the SITC. These two SITC sections raised (42.0% and 22.1% respectively), together with ‘chemicals and related products’ (10.8%), also their shares in total imports where the shares of  ‘crude materials, inedible, and mineral fuels’ and ‘miscellaneous manufactured articles’ decreased.
 
In comparison to external trade of the EU27 and external trade of the new member states, the dynamics of external trade in the Czech Republic in the first four months of 2007 was better. Data for January-April 2007 released by Eurostat on 18 July 2007 say that EU27 (EU15) exports rose by 6.9% (5.8%) and EU27 (EU15) imports by 5.6% (4.0%) on average year-on-year (based on EUR). Exports and imports of the 12 new member states were higher by 18.7% and 20.5% respectively on average year-on-year. Exports and imports of the 12 new member states grew on average by 18.7% and 20.5% respectively year-on-year. In January-April 2007 the share of the 12 new member states in total EU27 exports increased to 9.8% from 8.9% in January-April 2006 and their share in total EU27 imports grew to 11.0% from 9.7% over the same period. The EU27 trade balance reached a EUR 27.3 billion deficit in January-April 2007 (EU15 deficit was EUR 9.2 billion and the 12 new member states’ deficit EUR 18.1 billion). As the only one among the new EU member states, the Czech Republic recorded a trade surplus in the same period.
 
The external trade results in the first half of 2007 were affected by:
 
- the continuing growth of industrial production. In January-May 2007 the y-o-y industrial production index reached 111.2 (of which in ‘manufacturing’ 112.4). The largest year-on-year increases were recorded in ‘manufacture of rubber and plastic products’, ‘manufacture of other non-metallic mineral products’, ‘manufacture of machinery and transport equipment’ and ‘manufacture of electrical and optical equipment’. The rise in manufacturing industries ⁷ had a decisive share (98.3%) in the year-on-year increase of total exports. In the first half of 2007 manufacturing exports were by 16.4% (CZK 164.5 billion) higher year-on-year.
The most dynamic items of manufacturing exports in the first half of 2007 were ‘telecommunications equipment’ and ‘office machines and automatic data-processing machines’ and ‘machinery specialized for particular industries‘. ‘Road vehicles’ retained the strongest position in exports. Exports of road vehicles made up 17.3% of total exports in the first half of 2007 (18.3% in the first half of 2006), of which exports of passenger cars 8.8% (9.8% in the first half of 2006) and exports of ‘parts and accessories for motor vehicles’ 7.2% (like in the first half of 2006). The surplus of external trade in road vehicles rose from CZK 102.2 billion in the first half of 2006 to CZK 105.7 billion in the first half of 2007, of which surplus in passenger cars slightly decreased (from CZK 79.8 billion to CZK 78.3 billion) and surplus in ‘parts and accessories for motor vehicles’ grew (from CZK 29.6 billion to CZK 36.0 billion). Above-the-average increases in exports of ‘telecommunications equipment’ (45.1%) and ‘office machines and automatic data-processing machines’ (22.2%) were simultaneous with the marked growth of corresponding imports (54.8% and 37.1% respectively), which resulted in lower surpluses in these items year-on-year (by CZK 2.1 billion and CZK 3.9 billion respectively). An above-the-average rise in exports of ‘machinery specialized for particular industries’ led to a higher surplus in this item by CZK 1.4 billion;
 
- favourable terms of trade figures. ⁸ In January-May 2007 export and import prices were up by 2.1% and down by 1.3% respectively on average compared to January-May 2006. The terms of trade figure reached 103.4. External trade prices were affected predominantly by prices in the world market and by the strengthening of CZK against EUR and especially against USD. In January-June 2007, in comparison to January-June 2006, CZK appreciated on average by 1.2% against EUR and by 9.5% against USD. The world prices of raw materials and food increased by 1.9% ⁹ year-on-year in the first half of 2007. This moderate growth was influenced by a year-on-year fall in petroleum prices (-4.5%) and a year-on-year increase in natural gas prices (2.4%); the world prices of the predominating majority of commodities grew more than the average (e.g., world prices of metals 33.8%, textile raw materials 10.8%, and food and oils 16.0%). Just the prices of petroleum and natural gas had, together with a slightly higher and considerably lower, respectively, volume of corresponding imports, a favourable impact on the trade balance. Trade deficit in ‘petroleum, petroleum products and related materials’ stood at CZK 49.5 billion in the first half of 2007 (down by CZK 2.5 billion year-on-year) and trade deficit in ‘gas, natural and manufactured’ was CZK 24.5 billion (down by CZK 8.2 billion year-on-year);
 
- economic growth in the world and especially in the EU member states. A strong economic growth is observed in 2007 in China, India and Russia; also the EU economy is in good shape (the best over the last six years) and recorded a higher growth than US and Japan’s economies. The good economic figures of the EU states were particularly due to Germany which is of a key importance for external trade of the Czech Republic. In the first half of 2007 31.4% of the CR’s exports went to Germany. A positive feature for the CR’s external trade is also economic development in Slovakia, the second most important destination for the CR’s exports (an 8.6% share in the first half of 2007).
 
A more detailed view of external trade by group of countries in the first half of 2007 compared to the first half of 2006 shows that:
 
- total exports to all groups of countries increased, with the exception of exports to European transition economies and other developed market economies (due to lower exports to the United States and Canada). Above-the-average dynamics were observed in exports to EU27 member states (16.6%), EFTA states (mainly to Norway), CIS countries (especially to Russia) and other states (mainly to China). Out of the absolute increase in total exports, 88.0% (CZK 147.3 billion) is attributable to increase in exports to EU27 member states. The rise in exports to EU27 member states reflected different dynamics of exports to individual EU27 member states. Exports to the prevailing number of EU27 member states increased more than the average - for example exports to Hungary, Slovakia, Poland, Sweden, Italy, the United Kingdom, Denmark and Romania; lower dynamics were recorded for exports to Germany (yet the absolute growth of CZK 42.8 billion belonged to the highest ones and contributed with more than a quarter to the growth of total exports), Spain, Belgium, France, the Netherlands and Austria;
 
            - total imports from all groups of countries grew, except imports from CIS countries (due to lower imports from Russia, Azerbaijan and Kazakhstan) and from the EFTA states (lower imports from Norway). Above-the-average increases were recorded for imports from other states (growth of imports from China by 45.7%), European transition economies, developing economies (higher exports from Singapore, India and Korea) and EU27 member states (15.7%). Imports from other developed market economies rose less than the average (due to imports from Japan and the United States). Increase in imports from EU27 member states by CZK 112.3 billion made up 76.3% of the total imports growth. Imports from Hungary, Belgium, Sweden, Italy, the United Kingdom, Austria, the Netherlands and France grew above the average, imports from Slovakia, Poland, Germany and Spain increased slightly below the average, and imports from Romania dropped;
 
- the external trade balance resulted from a surplus with EU27 member states (CZK 208.9 billion) and a deficit with the non-EU27 countries (CZK 155.2 billion). 
The trade balance and year-on-year balance increases/decreases with individual groups of countries reflected the situation of the CR’s external trade with the main partner states, as documented by the following table:
 

The commodity structure of external trade in the first half of 2007, in comparison to the first half of 2006, was characterised in:
 
- machinery and transport equipment by an above-the-average growth of exports and especially of imports and hence by strengthening of the share of these products in total exports (by 0.5 p.p.) and total imports (by 1.7 p.p.). Higher exports (imports) of ‘machinery and transport equipment’ by CZK 94.8 billion (CZK 78.6 billion) accounted for 56.7% (53.4%) of the increase in total exports (total imports). Surplus of trade in machinery and transport equipment reached CZK 163.2 billion. The highest surplus was produced by trade in ‘road vehicles’ (CZK 105.7 billion), followed by ‘general industrial machinery and equipment, n.e.s.’ (CZK 20.4 billion) and ‘office machines and automatic data-processing machines’ (CZK 12.6 billion);
- manufactured goods classified chiefly by material by above-the-average dynamics of exports and especially of imports and hence by increases of their shares in total exports (by 0.2 p.p.) and total imports (by 1.6 p.p.). Trade surplus in these goods dropped considerably (from CZK 11.9 billion to CZK 1.4 billion) year-on-year. This fall was mainly due to the growth of deficits in ‘iron and steel’ (from CZK 5.5 billion to CZK 15.2 billion) and ‘non-ferrous metals’ (from CZK 21.5 billion to CZK 28.2 billion). The highest surpluses which grew year-on-year were concentrated in ‘manufactures of metals, n.e.s.’ (CZK 17.8 billion), ‘non-metallic mineral manufactures, n.e.s.’ (CZK 14.2 billion) and ‘rubber manufactures, n.e.s.’ (CZK 12.3 billion);
- miscellaneous manufactured articles, commodities and transactions not classified elsewhere in the SITC by considerably below-the-average dynamics of exports and especially of imports, which raised the surplus from CZK 8.3 billion to CZK 12.0 billion and weakened the share of these products in total exports by 0.5 p.p. and in total imports by 0.7 p.p. A growth of surplus was recorded only for ‘prefabricated buildings, sanitary, plumbing, heating and lighting fixtures and fittings, n.e.s.’ (from CZK 6.7 billion to CZK 7.0 billion); surplus in ‘furniture and parts thereof’ dropped from CZK 12.1 billion to CZK 11.2 billion. Trade balance of ‘miscellaneous manufactured articles’ improved due to deficit decreases in ‘footwear’, ‘professional, scientific and controlling instruments and apparatus, n.e.s.‘, and in particular due to a turn of the CZK 3.0 billion deficit into a 0.1 billion surplus in ‘miscellaneous manufactured articles, n.e.s.‘;
- chemicals and related products by below-the-average dynamics of exports and above-the-average growth of imports. Trade deficit in these products was the second highest (CZK 51.4 billion) and rose by CZK 7.8 billion year-on-year. The largest deficit (increase by CZK 2.3 billion year-on-year) kept concentrating in ‘medicinal and pharmaceutical products’ (CZK 18.7 billion). Deficits of trade in ‘plastics in non-primary forms’ grew from CZK 7.3 billion to CZK 9.1 billion and in ‘plastics in primary forms’ from CZK 8.1 billion to CZK 10.4 billion;
- crude materials, inedible, and mineral fuels by a below-the-average growth of exports and decrease in imports (by 8.9% year-on-year). This resulted in year-on-year decreases in the shares of these products in total exports, and especially in total imports (from 12.9% to 10.4%). Trade deficit in this group of products dropped from CZK 74.0 billion to CZK 54.5 billion, yet it remained the highest among all sections of the SITC. Besides the aforementioned deficit in ‘petroleum, petroleum products and related materials’ and ‘gas, natural and manufactured’, the trade balance was affected by an increase of surplus in ‘cork and wood’ and by the deficit turning into a surplus in ‘metalliferous ores and metal scrap’;
- agricultural and food crude materials and products by a below-the-average growth of exports and especially of imports, by a weakening of their share in external trade and by a slight year-on-year increase in trade deficit from CZK 16.1 billion to CZK 17.0 billion. Trade deficit grew in ‘vegetables and fruit’ (from CZK 9.3 billion to CZK 10.6 billion) and ‘meat and meat preparations’ (from CZK 3.9 billion to CZK 4.2 billion), and decreased in ‘tobacco and tobacco manufactures’ (from CZK 2.8 billion to CZK 0.5 billion); trade surplus fell markedly in ‘sugars, sugar preparations and honey‘ (from CZK 20.7 billion to CZK 0.1 billion).

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¹ All the data are at current prices. Data for 2006 are updated referring to 16 May 2007 closing date. Data for 2007 are as follows: data for January-March updated referring to 16 May 2007 closing date, for April preliminary referring to 30 May 2007 closing date, for May preliminary referring to 28 June 2007 closing date, and for June preliminary referring to 31 July 2007 closing date.
² In January 2007 Bulgaria and Romania joined the European Union. The accession of these states to the EU caused changes in the membership of the following groups of countries – developed market economies, the EU, and European transition economies. To maintain the data comparability, all data for the first half of 2006 have been recalculated to the comparable membership effective since 2007.
³ The Commonwealth of Independent States.
⁴ China, North Korea, Cuba, Laos, Mongolia and Vietnam.
⁵ The European Free Trade Association.
⁶ Developed market economies, except the EU27 member states and the EFTA states.
⁷ Items CZ-CPA15 to CZ-CPA36.
⁸ Import and export price indices in the CR are published later than data on the external trade of the CR.
⁹ See the CZSO World Price Indices of Industrial Raw Materials and Food in June 2007, CZSO, July 2007.