1 Overall trade balance shows a deficit
2 The volume of trade with Slovakia declines
3 The volume of trade with other countries rises
4 The terms of trade continue to improve
5 Year-to-year increase in exports at last year level
7 The share of higher value added products in exports rises
8 Engineering imports indicate larger investments in manufacturing industries
1) In the period January - September 1994, the CR balance of trade (including Slovakia) showed a deficit of CZK 1.6 bn according to the Czech Statistical Office. The main reason for this deficit is a significant decline in exports to Slovakia and an increase in imports from other countries.
The balance of trade in convertible currencies, including imports under leasing arrangements according to IMF methodology, ran a deficit of CZK 4.9 bn (USD 169.5 mil.); the balance of trade in non-convertible currencies (government credit payments by means of natural gas deliveries) registered a deficit of CZK 5.5 bn (USD 190 mil.); the balance of trade with Slovakia recorded a moderate deficit of CZK 0.6 bn (USD 23 mil.). According to CNB calculations, the overall balance of trade of the Czech Republic ran a deficit of CZK 11.0 bn (USD 381 mil.).
2) Compared to the same period last year, trade with Slovakia, the CR's second largest trading partner, fell by CZK 13.6 bn. Exports dropped approximately by 25%, imports by only 1%. This fall was due to several factors: a 15% exchange rate difference on the new block, a 10% import surcharge, obligatory provision of certificates for food imports, a restrictive monetary policy directed at cutting the state budget deficit and reducing demand in Slovakia.
3) Conversely, trade with other countries increased by 18%, of which exports by 17% and imports by 20%. At the same time, larger exports to these countries, generated by a moderate increase in industrial production and continuing re-direction of former Czechoslovak exports to other markets, offset the fall in trade with Slovakia. In terms of turnover, the largest trading partners were Germany, Austria, Russia and Italy.
4) An increase in terms of trade by 4.5 percentage points from the same period last year was primarily the result of a 3.4% rise in export prices of most export groups, particularly chemical products, industrial and market products and machines. Import prices fell by 0.6%, particularly for fuels (gas). The increase in raw material prices in world markets was reflected in the raw material price index HWWA, which is, due to its structure and the number of items, a significant indicator of the average development of world prices of raw materials. The HWWA index recorded an increase in all three commodity groups (foodstuffs, raw materials, fuels) from 138 points in September 1993 to 156 points in September 1994. Czech import prices will be affected by this increase with a certain delay.
5) The year-to-year increase in exports was accounted for mainly by countries with advanced market economies whose share in Czech exports had an upward trend. The greatest increase was recorded in industrial products and market products classified by type of material, i.e. the export structure inclined more strongly towards higher value added exports.
6) These export results were aided by a relatively stable macroeconomic environment, low labour costs and a pro-export foreign exchange rate. In order to create conditions for Czech exporters similar to those provided to their foreign competitors, Ceska exportni banka, a.s. (Czech Export Bank) was established, which should, after approval by Parliament, ensure the financing and insurance of export credits. The network of Czech Centres Abroad, now being founded by the Ministry of Foreign Affairs, should help to solve the problem of providing information for Czech exporters. During the year, another instrument was used to promote crediting of Czech exporters under more advantageous conditions: the rediscount by the CNB of export bills of exchange from commercial banks at a discount rate.
7) Despite continuing growth in exports of raw materials, wood in particular, it is obvious that the share of higher value added products is increasing which is confirmed by a 40% growth in exports of industrial products and an increase in the most important export group of market products classified by type of material (glass products and metal products). The export of engineering products jumped by 8%. This, however, was not sufficient to maintain the last year's share which dropped by two points. A negative effect on exports could follow from anti-dumping procedures initiated in April this year against cement exporters which have not yet been completed.
8) An increase was recorded in all groups within the import commodity structure, particularly in chemicals, foodstuffs and raw materials, where a rise in import prices was also reflected. The volume of imported fuels increased, the prices of natural gas fell and those of oil grew moderately. A rise in imports of engineering products indicates a strengthened trend toward demand for imports of new technology which is extending outside the services sphere to some manufacturing industries. A decrease in leasing imports was probably effected by a temporary saturation of the market and a lower need for imports.
Demand increased for imports of goods for personal consumption, particularly foodstuffs, industrial products (clothing, footwear, furniture), passenger cars, medical products and electrical appliances. Their share of total imports rose by 2 points from the same period last year, to 17%. Imports of consumer goods helped to enrich the supply of goods, but in some cases it was to the detriment of consumers and domestic firms, e.g. cheap, lower quality clothing imported from Asian countries is displacing domestic clothing from the market.