External trade - 2. quarter of 2008

 
In the first half of 2008 external trade ¹ grew markedly less year-on-year. External trade turnover rose by 5.0% (+16.2% in the first half of 2007), which was the lowest year-on-year increase after joining the EU. Both exports and imports recorded lower rates of growth; increase in imports was by 0.4 percentage point lower than increase in exports. The trade balance reached the highest surplus ever recorded in the Czech Republic (CZK 64.4 billion).
 
In the first half of 2008, compared to the first half of 2007:
- exports increased by 5.2% and reached CZK 1 279.4 billion, imports grew by 4.8% and reached CZK 1 214.9 billion. Increases in exports and imports accounted for 53.0% and 47.0% respectively of the year-on-year growth of external trade turnover by CZK 118.8 billion. Due to considerable appreciation of CZK against EUR and even more against USD, exports and imports in these foreign currencies grew more rapidly – exports and imports in EUR by 17.6% and 17.2% respectively, exports and imports in USD by 35.5% and 35.0% respectively;
 
  - trade balance surplus was by CZK 7.2 billion higher and reached CZK 64.4 billion (the rate of coverage of imports by exports was 105.3% in comparison to 104.9% in the first half of 2007. A considerable part of the trade balance surplus was unfavourably affected by terms of trade. By group of countries, trade surplus with EU27 states improved (by CZK 52.2 billion) and trade deficit with non-EU27 countries deteriorated (by CZK 45.0 billion). The surplus with the European transition economies decreased by CZK 2.5 billion and with EFTA states grew by CZK 1 billion. Trade deficit deteriorated with the CIS ² countries by CZK 15.4 billion, with other states ³ by CZK 15.3 billion, with developing economies by CZK 8.8 billion and with other developed market economies by CZK 3.5 billion. By commodity section, trade balance improved due to a CZK 21.3 billion increase of surplus in ‘machinery and transport equipment’, a CZK 5.4 billion increase of surplus in ‘manufactured goods classified chiefly by material’ and a CZK 7.1 billion decrease of deficit in ‘agricultural and food crude materials and products‘. Trade balance deteriorated due to a 4.0 billion decrease of surplus in ‘miscellaneous manufactured articles’ and a CZK 2.1 billion increase of deficit in ‘chemicals and related products’, and especially due to a 20.5 CZK billion increase of deficit in ‘crude materials, inedible, and mineral fuels’;
   
- by group of countries, the share of EU27 states in total exports slightly decreased (from 85.8% to 85.7%), and in total imports dropped more (from 71.8% to 68.5%). Higher share in total exports was registered only for CIS countries, while the shares of the remaining groups of countries did not change (other states, European transition economies and EFTA states) or decreased (developing economies and specially other developed market economies). In total imports the shares of CIS countries, other states, developing economies and European transition economies increased, whereas the share of other developed market economies dropped. The share of EFTA states remained at the same level year-on-year;

- by commodity section, the share of ‘machinery and transport equipment’ in total exports rose (from 53.9% to 54.3%) to the detriment of ‘manufactured goods classified chiefly by material’, ‘miscellaneous manufactured articles’, ‘agricultural and food crude materials and products‘ and ‘crude materials, inedible, and mineral fuels’. The share of ‘machinery and transport equipment’ in total imports decreased (from 42.3% to 41.9%). With the exception of ‘crude materials, inedible, and mineral fuels‘ and ‘miscellaneous manufactured articles’, which raised their share in total imports, the shares of the other sections of the SITC decreased.
 
In comparison to external trade of EU27 states and external trade of the new EU member states, the growth rate of external trade in the Czech Republic was better at the beginning of 2008. Data for January–April 2008 released by Eurostat on 18 July 2008 say that EU27 (EU15) exports rose by 8.2% (7.1%) and EU27 (EU15) imports by 9.3% (8.2%) on average year-on-year (based on EUR). Exports and imports of the twelve new member states were higher by 18.6% and 18.4% respectively on average year-on-year. In January–April 2008 the share of the twelve new member states in total EU27 exports increased to 10.8% (from 9.9% in January–April 2007) and their share in total EU27 imports grew to 12.0% (from 11.1% in January–April 2007). The EU27 trade balance reached a EUR 16.5 billion deficit in January–April 2008 (EU15 deficit was EUR 13.3 billion and the twelve new member states’ deficit was EUR 3.2 billion). As one of the ten EU member states and one of the two (besides Hungary) among the new EU member states, the Czech Republic recorded a trade surplus in January–April 2008.
 
The external trade figures for the first half of 2008 were affected by:
 
- a more moderate growth of industrial production. In January–May 2008 the y-o-y industrial production index reached 106.6 (of which in manufacturing 107.0). Above-the-average year-on-year increases were recorded only in ‘manufacture of electrical and optical equipment’ (+22.0%), ‘manufacture of machinery and equipment’ (+11.6%) and ‘manufacture of transport equipment’ (+9.8%). In particular increases in these manufacturing industries ⁴ had a favourable effect on growth of export. Manufacturing exports made up 96.5% of total exports in the first half of 2008. Increase in manufacturing exports accounted for 92.5% of increase in total exports. Compared to the first half of 2007, manufacturing exports grew by 5.0% (CZK +58.3 billion).
The most important section of manufacturing exports in the first half of 2008 remained ‘machinery and transport equipment’, especially ‘road vehicles’, ‘electrical machinery, apparatus and appliances, n.e.s.’, ‘general industrial machinery and equipment’, ‘office machines and automatic data-processing machines’ and ‘telecommunications equipment n.e.s.’. Exports of ‘road vehicles’ made up 16.9% of total exports in the first half of 2008 (17.4% in the first half of 2007), of which exports of passenger cars 8.2% (8.9% in the first half of 2007) and exports of ‘parts and accessories for motor vehicles’ 7.3% (7.1% in the first half of 2007). While external trade in road vehicles produced the highest surplus among all SITC classes, the surplus remained at the same level year-on-year (CZK 106.5 billion), of which surplus in passenger cars fell by CZK 5.1 billion to CZK 75.4 billion and surplus in ‘parts and accessories for motor vehicles’ grew by CZK 4.8 billion to CZK 39.3 billion. The second largest surplus in machinery trade (by CZK 6.1 billion higher year-on-year) and in total external trade as well was registered for ‘general industrial machinery and equipment’ (CZK 26.5 billion);
 
- unfavourable terms of trade ⁵ . External trade prices were affected by prices in the world market and sharp appreciation of CZK against EUR and USD. In January–May 2008, in comparison to January–May 2007, export and import prices were down by 4.7% and 3.3% respectively on average. The terms of trade figure reached 98.6. In the same period exports and imports increased by 5.9% and 6.1% respectively at current prices, but by 11.5% and 10.5% respectively at constant prices. In January–May 2008 the prices reduced current price exports by over CZK 56 billion and current price imports by about CZK 42 billion. External trade surplus at constant prices was by nearly CZK 14 billion higher than external trade surplus at current prices. In January–June 2008, compared to January–June 2007, CZK strengthened by 11.7% against EUR on average and by 28.5% against USD on average;
 
- economic slowdown in EU member states that occurred especially in Q2 2008; in Q1 2008 the EU economy still recorded a good growth (+2.3%) ⁶ . The slowdown results from the continuing instability in financial markets, strong EUR, economic slowdown in the US and increasing inflationary pressures due to the growth of commodity world prices ⁷ (especially food, oil and natural gas). According to a forecast of the European Commission, EU27 GDP will rise by 2.0% in 2008 (as against 2.8% in 2007). Economic development in two main trading partners – Germany and Slovakia – will be decisive for external trade of the Czech Republic. Germany was the destination for 30.7% and Slovakia for 8.9% of the Czech Republic’s total exports in the first half of 2008 (as against 31.3% and 8.6% respectively in the first half of 2007). Exports to Germany grew by 3.0% (CZK +11.4 billion) and to Slovakia by 8.1% (CZK +8.5 billion) year-on-year.
 
External trade of the Czech Republic by group of countries in the first half of 2008 shows that, in comparison to the first half of 2007:
 
- exports to all groups of countries (except other developed market economies and European transition economies) increased. Above-the-average relative growth was observed in exports to CIS countries (the Russian Federation) and other states (China). Yet in value the growth of exports to these groups of countries made up only 15.4% of the growth of total exports. Exports to developing economies, EFTA states and EU27 states increased below the average. Exports to EU27 states rose by 5.0% (CZK +52.5 billion) year-on-year. However, increase in exports to EU27 states made up 83.4% of increase in value of total exports. The rise in exports to EU27 states reflected different growth rates of exports to individual EU27 member states. Exports to twelve EU27 member states increased more than the average – for example exports to Romania, Poland, Sweden, Austria, the Netherlands, Slovakia and Italy; below-the-average increases were registered, e.g., in exports to France, Germany and the United Kingdom; exports to, e.g., Spain, Hungary and Belgium decreased. The highest year-on-year increases in value were registered for exports to Germany (CZK +11.4 billion), Poland (CZK +10.3 billion), Slovakia (CZK +8.5 billion), Austria (CZK +5.0 billion) and Italy (CZK +4.2 billion). Increase in exports to these states represented 62.5% of total export increase and 75.0% of increase in exports to EU27 states;
 
            - imports from non-EU27 countries grew by 17.0% and imports from EU27 states stagnated. Highly above-the-average increases were recorded in imports from European transition economies, CIS countries (the Russian Federation, Azerbaijan and Kazakhstan), other states (China), developing economies (Thailand, Korea and Singapore), Insignificant relative growth was registered for imports from other developed market economies and EFTA states. Unimportant relative growth was observed in imports from EU27 states. Increase (in value) in imports from non-EU27 countries by CZK 55.5 billion made up actually the total increase of imports. Imports from six EU27 states grew more than the average – for example imports from Austria, Slovakia and Poland; imports from four EU27 states rose less than the average, e.g. imports from Hungary, Germany and Romania; imports from 16 EU27 states decreased year-on-year, for example imports from France, the Netherlands and Italy. The highest year-on-year increases in imports in value were recorded for imports from Germany (CZK +7.5 Billion), Slovakia (CZK +4.6 billion and Poland (CZK +3.5 billion);
 
- trade balance with EU27 states recorded surplus and with non-EU27 countries deficit. Trade deficit with non-EU27 countries was mainly due to the trade deficit with other states ³⁾ (CZK 89.9 billion), CIS countries (CZK 54.2 billion), developing economies (CZK 31.0 billion) and other developed market economies (CZK 36.6 billion). 
The trade balance and year-on-year balance increases/decreases with individual groups of countries reflected the situation of external trade balance with the main partner states, as documented by the table below. External trade with 13 EU27 states reached a surplus of CZK 247.8 billion, of which trade surplus with three EU27 states (Germany, Slovakia and the United Kingdom) made up 53.8%. Trade balance with 13 non-EU27 states reached a deficit of CZK 205.3 billion, of which trade deficit with three states (China, the Russian Federation and Japan) made up CZK 168.1 billion.
 
 Commodity structure of external trade in the first half of 2008 reflected various export and import rates in individual SITC sections. In the first half of 2008, in comparison to the first half of 2007, external trade was characterised in:
                                                                                                                                                                                             
- machinery and transport equipment by above-the-average growth of exports and below-the-average growth of imports. The share of ‘machinery and transport equipment’ in total exports and imports grew and dropped respectively. Higher exports (imports) of ‘machinery and transport equipment’ by CZK 39.2 billion (by CZK 18.0 billion) accounted for 62.3% (32.2%) of increase in total exports (total imports). Surplus of trade in machinery and transport equipment reached CZK 185.9 billion (machinery exports covered 36.6% of machinery imports), surplus with EU27 stood at CZK 250.0 billion. The highest surplus was produced in trade in ‘road vehicles’, followed by ‘general industrial machinery and equipment’, ‘office machines and automatic data-processing machines’, ‘telecommunications and sound-recording equipment’, ‘electrical machinery, apparatus and appliances, n.e.s.’ and ‘machinery specialized for particular industries’. The above commodity divisions reached the total external trade surplus of CZK 175.4 billion, of which trade surplus with EU27 states was CZK 244.6 billion;
 
- manufactured goods classified chiefly by material by stagnating exports and decreasing imports. The share of these goods in total exports and imports decreased (from 21.1% to 20.0% and from 21.9% to 20.4% respectively). The trade surplus grew by CZK 5.3 billion year-on-year. This improvement was due to deficit decreases in ‘non-ferrous metals’ by CZK 3.7 billion and ‘iron and steel’ by CZK 3.5 billion. The highest surpluses (though lower than in the first half of 2007) were concentrated in ‘manufactures of metals’, ‘non-metallic mineral manufactures’ and ‘rubber manufactures, n.e.s.’. They reached CZK 42.2 billion in total;
 
- miscellaneous manufactured articles, commodities and transactions not classified elsewhere in the SITC by below-the-average growth of exports and slightly above-the-average growth of imports, which resulted in a fall of surplus by CZK 4.0 billion year-on-year and decrease of their share in total exports and increase in total imports. Trade surplus rose insignificantly in ‘prefabricated buildings, sanitary, plumbing, heating and lighting fixtures and fittings, n.e.s.’ and decreased in ‘furniture and parts thereof’. Trade deficit deteriorated in ‘articles of apparel and clothing accessories’, ‘footwear’ and ‘professional, scientific and controlling instruments and apparatus, n.e.s.‘;
 
- chemicals and related products by below-the-average increase of exports and imports and thus by stagnation of their share in total exports (6.0%) and slight decrease in total imports (from 10.7% to 10.6%). The trade deficit was the second highest (CZK 52.7 billion) and rose by CZK 2.1 billion year-on-year. A large deficit was concentrated in ‘medicinal and pharmaceutical products’ (CZK 21.3 billion). Trade deficits in ‘plastics in primary forms’ and ‘plastics in non-primary forms’ decreased by CZK 1.3 billion and CZK 1.7 billion respectively year-on-year and trade deficit in ‘chemical materials and products, n.e.s.’ deteriorated;
 
- crude materials, inedible, and mineral fuels by highly above-the-average growth of exports and even more of imports, which resulted in a year-on-year increase in the share of these products in total external trade. The trade deficit grew by CZK 20.5 billion year-on-year and remained the highest among all SITC sections (CZK 76.1 billion). The deficit deteriorated due to higher deficit in trade in ‘petroleum, petroleum products and related materials’ by CZK 11.0 billion and ‘gas, natural and manufactured’ by CZK 9.7 billion. In the first half of 2008, compared to the first half of 2007, imports of these commodity items grew by 27.5% and 43.4% respectively. Year-on-year, oil imports dropped by 1.1% in volume and increased by 30.0% in value; natural gas imports rose by 32.7% in volume and by 44.5% in value. The balance of trade in crude materials, inedible, and mineral fuels was affected by increase in trade surplus in ‘coal, coke and briquettes’ by CZK 3.7 billion and decreases in trade surplus in ‘electric current’ by CZK 3.5 billion and ‘cork and wood’ by CZK 1.4 billion;
 
- agricultural and food crude materials and products by the highest relative increase of exports and insignificant increase of imports. The trade deficit fell by CZK 7.1 billion year-on-year. Trade deficit in ‘vegetables and fruit’ decreased by CZK 1.0 billion, trade surplus in ‘cereals and cereal preparations’ rose by CZK 1.8 billion and trade balance of ‘tobacco and tobacco manufactures’ turned from the CZK 0.5 billion deficit to a CZK 2.0 billion surplus.

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¹ All data are at current prices. Data for January–December 2007 have been updated and refer to 30 May 2008 closing date. Data for January–March 2008 are updated and data for April 2008 preliminary referring to 30 May 2008, data for May 2008 are preliminary referring to 27 June 2008 and data for June 2008 are preliminary referring to 28 June 2008. The data come from basic units and then rounded, which may give rise to discrepancies.
² The Commonwealth of Independent States.
³ China, North Korea, Cuba, Laos, Mongolia and Vietnam.
⁴ Items CZ-CPA15 to CZ-CPA36.
⁵ Import and export price indices in the Czech Republic are published later than data on the external trade of the CR.
⁶ Second estimate by Eurostat of 9 July 2008.
⁷ In the first half of 2008, in comparison to the first half of 2007, the world prices of industrial raw materials and food grew by 50.6% in total; for example, world prices of food and oils by 42.9%, crude oil Brent by 73.2%, natural gas by 40.9% – see CZSO World Price Indices of Industrial Raw Materials and Food for June 2008.