Foreign Trade Heavily Affected by Coronavirus Shockwave
The negative impact of the coronavirus pandemic on foreign trade is becoming more evident, with preliminary results on the balance of trade for the first eight months of the year pointing to a CZK 41.6 billion drop compared to the same period of 2019. Photo: Prague. Credit: KB / BD.
Czech Rep. Oct. 17 (BD) – New data released by the Czech Statistical Office (CZSO) reveals an adverse scenario for foreign trade in the wake of Covid-19. The balance of foreign trade in goods in the first eight months of the year totalled CZK 71.1 billion, which represents a CZK 41.6 billion decrease compared to the same period of 2019. Exports dropped by 11%, while imports fell by 9.7% against last year’s values.
In 2019, the figures presented a very different picture; compared to 2018, exports and imports increased by 2.1% and 0.8%, respectively. The surplus of the trade balance was CZK 47.2 billions higher than the previous year, indicating positive growth.
Covid-19 disrupted this favorable trend. The spring of 2020 saw the foreign trade balance sheet record its lowest value since Czech Republic joined the EU: a negative CZK 24.7 billion in April, with negative values extending to May. These two months registered the worst decreases in exports, mostly due to a drop in production.
June and August allowed for slight optimism with preliminary data confirming a return to normal values for imports and exports. The balance of trade even reached an historical high surplus in June, mainly due to the resumption of production and trade in the motor vehicle sector and helped by relatively low imports.
The stagnation in the manufacturing industry is the main explanation for the overall declines of imports and exports. Particularly, the reduction in sales of motor vehicles, machinery and electrical equipment, as Miluse Kavenova, director of the CZSO Foreign Trade Statistics Department, explains: “In the case of motor vehicles, the year-on-year decline in exports in the first eight months of this year was 21%, which in monetary terms represents CZK 140 billion”.
From a different perspective, the trade balance has been offset since the beginning of the year by declines in imports of oil, natural gas and basic metals.
Certainly, Czech Republic is not alone in this position; foreign trade has been impacted all over Europe, where similar disappointing figures were registered for the first eight months of 2020. According to Stanislav Konvicka, head of the CZSO Trade Balance Department, Germany exhibited the most accentuated drop on both sides of the commercial balance, while the EU27 countries’ trade in goods diminished by more than a third.