Skip to menu Skip to content
CS

External trade - 3. quarter of 2004

Product Code: e-6032-04

Show details


External trade in the 1st-3rd quarters of 2004

            Compared with the corresponding period of 2003, external trade in the 1st-3rd quarters of 2004 1 was affected by changes connected primarily with the accession of the Czech Republic to the European Union. Czech enterprises can operate on a large internal market, and trading conditions changed substantially. Customs barriers were removed, state borders within the European Union can be crossed without barriers, and transactions costs decreased. All that had positive implications for external trade proved by high growth rates of both exports and imports 2 , a year-on-year improvement of trade gap, and changes in commodity structure (mainly of exports).

 

External trade development in the 1st-3rd quarters of 2004 was influenced by:

 

- factors affecting external trade with various intensity for a long time. Among them are:

  • export and import prices. On top of effects of CZK/EUR and CZK/USD exchange rates in the 1st–3rd quarters of 2004, external trade prices responded to the movement of prices in the world market3, particularly prices of industrial raw materials (e.g. the world prices of petroleum Brent grew by 26.6% y-o-y, topping out in September with +59.3% y-o-y, and world prices of metals rose by 32.7% y-o-y), prices of many items of food (e.g. world prices of vegetable oils, rice, maize and wheat increased considerably y-o-y) and prices of timber. In January-August 2004, compared with the corresponding period of 2003, export prices grew faster than import prices4 (by 3.6% and 1.4% on average, respectively), the terms of trade index reached 102.2 y-o-y and affected favourably external trade deficit at current prices;
  • exchange rate of CZK against EUR and USD. In comparison with January-September 2003, CZK/EUR and CZK/USD exchange rates decreased by 1.2% and rose by 9.9%, respectively. Stronger CZK against USD reduced prices of imports in USD (above all cushioning the rising import prices of petroleum and natural gas and miscellaneous manufactured articles); the weaker CZK against EUR acted in favour of exports in EUR;
  • FDI inward flows in the last few years. Manufacturing industries, into which significant volumes of FDI were channelled (transport means, parts and accessories of motor vehicles, metal products, telecommunication equipment, consumer electronics and computers), currently produce exporting effect. FDI inward flows continued (albeit to a lesser extent) also during 2004 and reached CZK 82.1 billion5 in January-August 2004. The decisive part of this investment made investors from the EU25 (Netherlands, Slovakia, Austria and Cyprus) and from the United States and Japan;
  • sustaining growth of industrial production and sales in industry, particularly in enterprises with foreign capital participation;
  • domestic consumer demand, which grew slower than before. This is proved by retail sales at constant prices; they rose by 1.9% y-o-y in January-August 2004. The growth of domestic investment demand continued. Investment flowed predominantly in new machinery and equipment and in modernisation of equipment of existing units to meet standards required by the EU;
  • a slight recovery of economic growth in the world and in Europe, which resulted in a higher volume of external orders in the industry;

 

- and new factors related to the accession of the Czech Republic to the European Union and affecting external trade either non-recurrently or causing fixed changes. Among them were for example:      

  • changes in customs tariffs relating to the fact that the Czech Republic has become part of the customs territory of the European Union. Customs duty related to EU member states was removed and other customs duty related to third countries applied;
  • preferential agreements (on the customs union or on free trade) that the EU concluded with a number of states, ensuring better terms and conditions of trading. Naturally, also the Czech Republic makes use of these agreements after joining the EU. At the same time, however, many agreements concluded previously between the CR and some states came out of force. To a certain extent, these facts affected also changes in the territorial orientation of external trade of the CR after the accession to the European Union.

           

            External trade development in the 1st-3rd quarters of 2004 was characterised by:

 

- high growth rates of both exports and imports in all months of the reference period (except January 2004) and resulted in a record-breaking external trade turnover since the independent Czech Republic exists. Compared with the 1st-3rd quarters of 2003, exports were up by 22.7% (CZK 228.6 billion) and imports by 19.9% (CZK 207.3 billion). External trade turnover thus increased by 21.3% (CZK 435.9 billion) and amounted to CZK 2 483.8 billion. The levels of exports and imports in the reference period:

  • exports reached CZK 1 234.5 billion and accounted for 52.4% of the total growth of external trade turnover. Exports rose by 21.3% based on EUR and by 33.6% valued in USD, all y-o-y. Above-the-average relative growth of exports was recorded for all the main territories6 (except other states7). Nearly 87% of the increase in total exports was due to higher exports to the EU25 (+22.9%, i.e. CZK 198.7 billion). These states made up 86.4% of total exports (as against 86.3% in the 1st-3rd quarters of 2003). The increase in exports to the EU25 was affected by higher exports not only to Germany (+CZK 89.5 billion): also exports to other EU25 states, particularly to Slovakia, Poland, Netherlands, Italy, Hungary, Belgium and Austria, developed favourably (total exports to these states grew by CZK 85.4 billion y-o-y). Higher dynamics were reported for exports to developing economies (+27.7% y-o-y) and to the Commonwealth of Independent States (+41.1% y-o-y); however, these two groups of countries account for only 5.3% of total exports;
  • imports reached CZK 1 249.3 billion and made up 47.6% of the total growth of external trade turnover. Imports valued in EUR and in USD grew by 18.5% and 30.4%, respectively. Above-the-average relative growth of imports was recorded for imports from the EU25 (+21.1%), from European transition economies (+34.0%) and from other states (+28.7%). Below-the-average relative growth (+13.2%) was characteristic for imports from CIS; insignificant increase (+1.5%) occurred in imports from developing economies. A prevailing part of imports (72.4% as against 71.7% in the 1st-3rd quarters of 2003) was imports from the EU25. Out of the total y-o-y rise in imports from the EU25 (CZK 157.3 billion), CZK 60.2 billion was due to higher imports from Germany and CZK 56.1 billion due to higher imports from other EU25 states (Slovakia, Italy, Netherlands, Poland and United Kingdom). The trend of highly growing imports from China (+CZK 14.9 billion y-o-y) and from Japan (+CZK 16.8 billion y-o-y) kept on;
 

- a decrease in external trade deficit , resulting from exports growing faster than imports (by 2.8 percentage points). Imports were still higher than exports, but the difference went gradually down (exports covered 98.8% of imports, compared to 96.5% in the 1st-3rd quarters of 2003). A trade gap of CZK 14.8 billion was by CZK 21.3 billion lower y-o-y. However, the trade balance developed variously in individual quarters of 2004: a surplus of CZK 0.6 billion in the 1st quarter, deficit of CZK 11.3 billion in the 2nd quarter, and deficit of CZK 4.1 billion in the 3rd quarter. From the territorial point of view, external trade balance improved with all the main groups of countries with the exception of other countries. Deficit of trade with other countries reached CZK 60.8 billion, i.e. a deterioration of CZK 14.8 billion y-o-y. External trade with developing economies ran a deficit of CZK 39.6 billion (which was by CZK 7.0 billion less y-o-y) and deficit in relation to the Commonwealth of Independent States (CZK 42.9 billion) remained almost at the level of the 1st-3rd quarters of 2003. The surplus of trade with European transition economies increased (+CZK 3.3 billion, reaching CZK 18.1 billion). The biggest improvement took place in the balance of trade with the EU25 – surplus reached CZK 162.9 billion, which was by CZK 41.4 billion more y-o-y. It was just this increase that significantly affected the improvement of the total trade gap. A large share had mainly an increase in the surplus of trade with Germany (by CZK 29.2 billion) and other EU25 states (Slovakia, Belgium, Hungary, Netherlands and Austria, i.e. by CZK 31.1 billion in total); deficit of trade with Poland grew, surplus of trade with the United Kingdom aggravated, all y-o-y. Among individual states, the highest deficit was observed for trade with China (CZK 59.8 billion), Japan (CZK 36.1 billion) and Russia (CZK 34.6 billion);


- movements in commodity structure , which showed themselves by:
  • machinery and transport equipment strengthening their position in total exports (from 49.9% to 50.9%), which was influenced by an above-the-average increase in their exports (25.1%). This increase set the dynamics of overall exports because, with the exception of chemicals and related products, all the other sections of SITC saw below-the-average growth. Exports of machinery included products with high value added. While imports of machinery and transport equipment recorded a below-the-average relative growth and thus also a decrease in their share in total imports (from 42.2% to 40.8%), its absolute growth was among the highest. Development of external trade in machinery and transport equipment led to a y-o-y increase in surplus by CZK 56.1 billion, which offset the deteriorated balance in all the other SITC sections;
  • manufactured goods classified chiefly by material decreasing their surplus from CZK 22.5 billion to CZK 9.9 billion y-o-y;
  • miscellaneous manufactured articles decreasing their surplus by CZK 2.5 billion y-o-y;
  • chemicals and related products increasing their deficit (from CZK 62.2 billion to CZK 69.6 billion), which was the highest among all SITC sections;
  • crude materials, inedible, and mineral fuels increasing their deficit from CZK 52.1 billion to CZK 60.6 billion, strongly affected by growth of import prices of mineral fuels and lubricants, which remains a risky factor for the external trade balance;
  • agricultural and food crude materials and products increasing their deficit from CZK 15.8 billion to CZK 19.0 billion y-o-y.


1All the data are given at current prices. The 2003 data are final referring to 27 August 2004 closing date, the January-June 2004 data are updated referring to 27 August 2004 closing date, the July 2004 data are preliminary referring to 27 August 2004 closing date, the August 2004 data are preliminary referring to 29 September 2004 closing date, and the September 2004 data are preliminary referring to 29 October 2004 closing date.

2These dynamics are favourable also in comparison to external trade development in the EU25, which is documented by Eurostat data of 21 October 2004 on total external trade of the EU25, now available for January-July 2004. In the same period, EU25 exports and imports (based on EUR) grew on average by 7.4% and 6.3% y-o-y, respectively. Exports and imports of 10 countries that became EU members on 1 May 2004 were on average by approximately 19% higher and by more than 17% higher y-o-y, respectively.

3Import and export price indices are published in the Czech Republic a month later than data on external trade of the CR.

4The CZSO world price index of raw materials and food was 114.5 on average in the 1st-3rd quarters of 2004 over the corresponding period of 2003.

5According to preliminary data of the CNB from August 2004 monthly balance of payments compiled in compliance with methodology of the ECB.

6The enlargement of EU15 to EU25 as from 1 May 2004 caused a movement of member states among individual territorial groupings. Data for the corresponding period of 2003 (and of preceding years) related to individual groupings are, therefore, converted to the membership after the accession of the Czech Republic to the European Union, which maintains data comparability.

7China, North Korea, Cuba, Laos, Mongolia, and Vietnam.