External trade - 3. quarter of 2007

 

The high growth of external trade ¹ continued in Q1–Q3 2007. External trade turnover was up by 15.0% year-on-year and reached CZK 3 535.5 billion.
 
In Q1–Q3 2007, in comparison to Q1–Q3 2006:
           
- increase in exports was by 1.0 p.p. higher than increase in imports – exports grew by 15.9% year-on-year and reached CZK 1 802.5 billion, imports rose by 14.0% year-on-year and stood at CZK 1 733.0 billion. The increases of exports and imports accounted for 53.8% and 46.2% respectively of the year-on-year growth of external trade turnover, which was CZK 461.0 billion. Due to appreciation of CZK against EUR ² and even more against USD exports and imports in these currencies grew faster – exports and imports in EUR by 17.4% and 15.5% respectively, exports and imports in USD by 26.9% and 24.7% respectively;
 
- trade balance reached a surplus of CZK 69.5 billion (the rate of coverage of imports by exports was 104.0% in comparison to 102.3% in Q1–Q3 2006), which was by CZK 34.8 billion more year-on-year. A significant part of the trade surplus in Q1–Q3 2007 was produced by favourable terms of trade. By  group of countries ³ , trade surplus rose with the EU27 (by CZK 50.2 billion) and trade deficit with non-EU countries deteriorated by CZK 15.4 billion. Trade surplus with EU states reached nearly CZK 307 billion and compensated for the trade deficit with non-EU countries (mainly with China and the Russian Federation). The surplus with the European transition economies decreased by CZK 2.9 billion year-on-year, trade deficit improved with the CIS ⁴ countries by CZK 26.6 billion and deteriorated with other states ⁵ by CZK 39.5 billion and developing economies by CZK 4.1 billion. By commodity section, trade balance improved year-on-year due to a CZK 16.5 billion decrease of deficit in ‘crude materials, inedible, and mineral fuels‘, a CZK 26.7 billion increase of surplus in ‘machinery and transport equipment’ and a CZK 5.0 billion increase of surplus in ‘miscellaneous manufactured articles‘; on the other hand, trade balance deteriorated due to a CZK 12.9 billion decrease of surplus in ‘manufactured goods classified chiefly by material’, a CZK 10.4 billion increase of deficit in ‘chemicals and related products’ and a moderate increase of deficit in ‘agricultural and food crude materials and products’;   
- by group of countries,  the share of the EU27 weakened in total exports (from 85.7% to 85.3%) and strengthened in total imports (from 70.8% to 71.0%). A positive feature was that the shares of developing economies and CIS countries in total exports increased. In total imports the strongest increase was recorded for other states followed by developing economies, decreases were observed especially for the CIS countries and EFTA states;
- by commodity section, the share of ‘machinery and transport equipment’ in total exports rose (from 52.7% to 53.4%) at the expense of all the other sections of the SITC (except ‘agricultural and food crude materials and products’). ‘Machinery and transport equipment’ increased (from 40.3% to 42.1%), together with ‘manufactured goods classified chiefly by material’ and ‘chemicals and related products’, their share in total imports. The shares of ‘crude materials, inedible, and mineral fuels‘ and ‘miscellaneous manufactured articles’ in total imports decreased significantly.
 
In comparison to external trade of the EU27 and external trade of the new EU member states, the growth rate of external trade in the Czech Republic has been increasingly better. Data for January-July 2007 released by Eurostat on 18 October 2007 say that EU27 (EU15) exports rose by 6.6% (5.5%) and EU27 (EU15) imports by 5.7% (4.2%) on average year-on-year (based on EUR). Exports and imports of the 12 new member states were higher by 17.2% and 19.4% 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–July 2007 the share of the 12 new member states in total EU27 exports increased to 9.9% (from 9.0% in January-July 2006) and their share in total EU27 imports grew to 11.3% (from 10.0% in the same period). The EU27 trade balance reached a EUR 49.1 billion deficit in January–July 2007 (EU15 deficit was EUR 12.8 billion and the 12 new member states’ deficit EUR 36.3 billion). As one of the few EU member states (8) and the only one among the new EU member states, the Czech Republic recorded a trade surplus in the same period.
 
The external trade figures in Q1–Q3 2007 were affected by:
 
- the continuing growth of industrial production. In January–August 2007 the y-o-y industrial production index reached 109.9 (of which in ‘manufacturing’ 110.9). Above-the-average year-on-year increases were recorded in ‘manufacture of rubber and plastic products’, ‘manufacture of machinery and transport equipment’, ‘manufacture of other non-metallic mineral products’, ‘manufacture of electrical and optical equipment’, ‘manufacture of wood and wood products’ and ‘manufacture of transport equipment’. The rise in manufacturing industries ⁶ had a decisive share (96.5%) in the year-on-year increase of total exports. Manufacturing exports in Q1–Q3 2007 were by 15.9% (CZK 239.2 billion) higher than a year earlier.
The most dynamic items of manufacturing exports in Q1–Q3 2007 were ‘telecommunications equipment’, ‘other transport equipment’, ‘metalworking machinery’ and ‘office machines and automatic data-processing machines’. ‘Road vehicles’ retained the strongest position in exports. Exports of road vehicles made up 16.9% of total exports (17.4% in Q1–Q3 2006), of which exports of passenger cars 8.5% (9.3% in Q1–Q3 2006) and exports of ‘parts and accessories for motor vehicles’ 7.1% (7.0% in Q1–Q3 2006). Road vehicles produced the highest surplus of external trade and was up by CZK 12.6 billion year-on-year, of which surplus in passenger cars grew by CZK 3.0 billion and surplus in ‘parts and accessories for motor vehicles’ by CZK 9.5 billion. The second largest surplus in trade in machinery and in total external trade as well was registered for ‘general industrial machinery and equipment’;
 
- favourable terms of trade. ⁷ In January–August 2007, in comparison to January–August 2006, export and import prices were up by 2.4% and down by 0.8% respectively on average. The terms of trade figure reached 103.2. External trade prices were affected among other things by price development in the world market. The world prices of raw materials and food increased by 2.5% ⁸ on average year-on-year in Q1–Q3 2007. This moderate growth was influenced by a year-on-year decrease in petroleum prices (-1.1%) and a year-on-year increase in natural gas prices (0.1%); the world prices of the predominating majority of commodities grew more than the average (e.g., world prices of metals 29.5%, textile raw materials 14.1%, and food and oils 16.0%). Just prices of petroleum and natural gas, together with a moderately higher (by 2.0%) and considerably lower (by -20.0%) respectively volume of corresponding imports, had a favourable impact on the trade balance. In Q1–Q3 2007 trade deficit in ‘petroleum, petroleum products and related materials’ stood at CZK 78.8 billion (down by CZK 3.0 billion year-on-year) and trade deficit in ‘gas, natural and manufactured’ was CZK 34.2 billion (down by CZK 12.1 billion year-on-year);
 
- continuing (albeit less rapid) economic growth in the EU member states. 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 because Germany was the destination for 31.2% of the Czech Republic’s exports in Q1–Q3 2007. A positive aspect for the CR’s external trade is also economic development in Slovakia, the second most important destination for the CR’s exports (an 8.7% share in Q1–Q3 2007).
 
A more detailed view of external trade by group of countries in Q1–Q3 2007 shows that, in comparison to Q1–Q3 2006:
 
- exports to all groups of countries increased, except for exports to European transition economies. Above-the-average growth was observed in exports to other states (in particular to China), CIS countries (especially to the Russian Federation), EFTA states (mainly to Norway) and developing economies (mainly to India and Korea). Out of the absolute increase in total exports, nearly 83.0% (CZK 205 billion) is attributable to increase in exports to the EU27. The rise in exports to the EU27 reflected different growth rates of exports to individual EU27 member states. Exports to a prevailing number of EU27 member states (17) increased more than the average – for example exports to Sweden, Hungary, Italy, Poland, Slovakia, the United Kingdom and Romania; below-the-average increases were registered, e.g., in exports to France, Spain, Germany (yet the absolute growth of CZK 59.0 billion was the highest and contributed by 23.8% to the growth of total exports), the Netherlands, Austria and Portugal;
 
            - imports from all groups of countries grew, except for imports from the CIS countries (lower imports from the Russian Federation and Kazakhstan) and from the EFTA states (lower imports from Norway). High increases were registered for imports from other states (China up 49.7%), European transition economies and developing economies (Singapore, India and Korea). Imports from other developed market economies rose less than the average (due to imports from the US) and imports from the EU27 increased moderately more than the average. Increase in imports from the EU27 by CZK 154 billion made up nearly 73% of increase in total imports. For example imports from Hungary, Portugal, Italy, the United Kingdom, Belgium, Sweden, Austria, the Netherlands and Poland grew above the average; slightly below the average were imports from France, Germany (yet the absolute growth of CZK 50.1 billion was the highest and contributed by 23.5% to the growth of total imports), Slovakia and Spain; imports from Romania saw a decrease;
 
            - the external trade balance resulted from a surplus with the EU27 (CZK 306.8 billion) and a  deficit with the non-EU27 countries (CZK 237.3 billion).
 
The trade balance and year-on-year balance increases/decreases with individual groups of countries reflected the situation of external trade with the main partner states, as documented by the following table:
Commodity structure of external trade in Q1–Q3 2007, in comparison to Q1–Q3 2006, was characterised in:
 
- machinery and transport equipment by an above-the-average growth of exports and especially of imports and thus by a higher share of these products in total exports and total imports. Higher exports (imports) of ‘machinery and transport equipment’ by CZK 143.5 billion (by CZK 116.8 billion) accounted for 57.9% (54.8%) of increase in total exports (total imports). Surplus of trade in machinery and transport equipment reached CZK 233.0 billion. The highest surplus was produced in trade in ‘road vehicles’, followed by ‘general industrial machinery and equipment’ and ‘office machines and automatic data-processing machines’;
- manufactured goods classified chiefly by material by a low increase in exports and high increase in imports. Thus the share of these goods decreased in total exports and rose in total imports. The trade surplus dropped considerably (from CZK 15.3 billion to CZK 2.4 billion) year-on-year. This fall was due to the growth of deficits in ‘iron and steel’ and ‘non-ferrous metals’. The highest surpluses were concentrated in ‘manufactures of metals’, ‘non-metallic mineral manufactures’ and ‘rubber manufactures, n.e.s.’;
- miscellaneous manufactured articles, commodities and transactions not classified elsewhere in the SITC by below-the-average growth of exports and especially of imports, which made the surplus rise year-on-year and the share of these products in total exports and total imports drop. A growth of surplus was recorded only for ‘prefabricated buildings, sanitary, plumbing, heating and lighting fixtures and fittings, n.e.s.’; surplus in ‘furniture and parts thereof’ fell. Trade balance of ‘miscellaneous manufactured articles’ improved due to deficit decreases in ‘articles of apparel and clothing accessories’, ‘footwear’, ‘professional, scientific and controlling instruments and apparatus, n.e.s.‘, and in particular due to deficit turning into surplus in a number of products;
- chemicals and related products by below-the-average increase in exports and above-the-average increase in imports. Trade deficit in these products was the second highest (CZK 75.6 billion) and rose year-on-year. The large deficit (up by CZK 4.2 billion year-on-year) kept on concentrating in ‘medicinal and pharmaceutical products’. Trade deficit in ‘plastics in primary forms’ grew by CZK 2.1 billion year-on-year and in ‘plastics in non-primary forms’ by CZK 1.2 billion;
- crude materials, inedible, and mineral fuels by a below-the-average growth of exports and decrease in imports, which resulted in a year-on-year decrease in the share of these products in total external trade. Trade deficit in this group of products dropped year-on-year, yet it remained the highest (CZK 84.0 billion) 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 deficit turning into a surplus in ‘metalliferous ores and metal scrap’;
- agricultural and food crude materials and products by an above-the-average growth of exports and below-the-average growth of imports and thus keeping the trade deficit around the Q1–Q3 2006 level. Trade deficit grew in ‘vegetables and fruit’ and ‘meat and meat preparations’ and decreased in ‘tobacco and tobacco manufactures’; trade surplus fell considerably in ‘sugars, sugar preparations and honey‘.
 

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¹ All the data are at current prices. Data for 2006 are updated referring to 28 August 2007 closing date. Data for 2007 are as follows: data for January-June updated referring to 28 August 2007 closing date, for July preliminary referring to 28 August 2007 closing date, for August preliminary referring to 1 October 2007 closing date, and for September preliminary referring to 26 October 2007 closing date.
² In January–September 2007, in comparison to January–September 2006, CZK strengthened by 1.3% on average against EUR and by 9.5% on average against USD.
³ In January 2007 Bulgaria and Romania joined the European Union. The accession of these states to the EU affected changes in the following groups of countries’ memberships: developed market economies, the European Union and European transition economies. To maintain comparability, all data for Q1–Q3 2006 have been recalculated to comparable membership effective since 2007.
⁴ The Commonwealth of Independent States
⁵ China, North Korea, Cuba, Laos, Mongolia and Vietnam
⁶ Items CZ-CPA15 to CZ-CPA36
⁷ Import and export price indices in the CR are published later than data on the external trade of the CR.
⁸ See the CZSO World Price Indices of Industrial Raw Materials and Food in September 2007, CZSO, October 2007.