WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

By Olga Pindyuk and Alexandra Bykova

• The latest figures from the World Trade Organization (WTO) show that the volume of world merchandise trade contracted by only 5.3% in 2020 – a much better result than expected at the onset of the Covid-19 pandemic.
• Although foreign trade in the CESEE region has performed worse than the global average, it has managed to avoid the deep and long-lasting slump that occurred in the aftermath of the global financial crisis.
• Another difference in trade outcomes between the two crises is that in 2020 imports declined less than exports – likely pointing towards the efficiency of government programs in supporting final demand.
• The more rapid economic recovery in East Asia, and in China in particular, supported export activity in the CESEE region.
• The overall trade structure in CESEE remained largely unchanged, and participation in value chains remained mostly resilient.

While the global economy underwent a deep recession in the wake of the Covid-19 pandemic and ensuing lockdowns, latest data show an impressive resilience and recovery in international trade. A mix of factors were at play behind this relative trade resilience.

• Demand for imports was supported by the faster economic rebound of the East Asian economies, which managed to successfully mitigate the effects of the pandemic early on.
• Swift fiscal and monetary stimulus provided by many governments in the West boosted demand for imports there.
• Higher prices of many products have partially offset the trade volume decline. A surge in global food prices, an increase in transportation costs and supply chain disruptions all contributed to rising export prices.
• Accelerated digitalisation and the growth of e-commerce mitigated supply chain disruptions and facilitated international trade.

Although foreign trade in the CESEE region has performed worse than the global average, it has managed to avoid the deep and long-lasting slump that occurred in the aftermath of the global financial crisis. According to the preliminary data in our wiiw Annual Database, the annual fall in export and imports of goods (measured in euro-terms) in the region was 9.7% and 6.2% respectively (Figures 1 and 2). This is a much better result compared to the slump after the global financial crisis of 2009 when exports declined by 24.8%, and imports by 28.4%. Another difference in trade outcomes between the two crises is that in 2020 imports declined less than exports – likely pointing towards the efficiency of government programs in supporting final demand.

There have been significant disparities between trade performances inside the region, reflecting differences in trade structure, the scale of fiscal support programs and the restrictiveness of national anti-pandemic policies. Exports from the EU-CEE subregion declined in 2020 by just 3.9%, suggesting relative resilience of regional production chains. The steepest decline in exports was recorded in the CIS+UA, with the value of exports from Russia, Kazakhstan and Belarus being most affected by the collapse of oil prices in 2020. In contrast, Ukraine, which specialises in exports of agricultural commodities and metals, saw its exports decline by a mere 3.6%.

Similar heterogeneity can be observed in import performance, with the Western Balkans and CIS+UA experiencing a greater decline in imports than EU-CEE countries. The latter benefitted from more generous fiscal measures supporting both households and companies, which boosted demand for imports.

The more rapid economic recovery in East Asia, and in China in particular, supported export activity in the CESEE region. As Figure 3 shows, many CESEE countries managed to increase their exports to China, while only from the CIS+UA did exports to China decline – still, this decline was much smaller if compared with exports of CIS+UA to Germany.

Still, the overall trade structure remained largely unchanged, and participation in value chains remained mostly resilient. Traditionally the EU has been an important export destination, receiving more than half of exports for 16 out of 23 CESEE countries. For many countries this is due to their extensive involvement in car production chains with Germany. In 2020, for half of the countries the EU’s share of exports remained the same or increased slightly compared with the previous year, while a slight decline of less than 3 pp was observed in seven countries and a decline of above 3 pp – in Russia, Kazakhstan, Slovenia and Ukraine. Most dramatic decline by 8 pp to 33.7% was observed in Russia mostly due to unfavourable oil markets. Of all the EU-CEE countries only Slovenia experienced a noticeable decline of 4.7 pp to 67.3% (Figure 4).

Preliminary data for foreign trade in goods by partner and foreign trade in goods by commodity groups in 2020 and backwards revisions are available in our wiiw Annual Database. In addition to our database online retrieval tool, our new wiiw visual analytics tool CESEE Visual Data Explorer (CESEE VDE), which is exclusively available to members, offers rankings of the CESEE countries’ top ten trading partners according to 2020 data.

Countries covered:
Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Estonia, Hungary, Kazakhstan, Kosovo, Latvia, Lithuania, Moldova, Montenegro, North Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine.

Country groups list: CESEE countries