The foreign trade data for March reveal the impact of Covid-19
Following a steeper rise in exports of goods in January and February, which did not yet reflect the impact of the restrictions imposed due to the Covid-19 pandemic, the growth rate of exports became negative in March.
Furthermore, imports of goods also recorded a year-on-year decline already in March, implying consumer and business sentiments with respect to economic development in the coming months.
Exports of goods saw a minor decrease in March, although the value of exports in individual sectors continued to increase. The most pronounced rise was recorded for exports of agricultural and food products (relatively less affected sectors, with exports of agricultural products also diversified to territories less hit by Covid-19), and, according to the information provided by several sectors, their export value declined less markedly as the existing contracts on delivery overall remained in effect. In the first two months of the year, the rise in exports was on account of an increase in real volumes of exports, while the export unit value decreased further. It is likely that the expansion of real volumes was minimal or even decreased in March, as suggested by the sector survey data and data on manufacturing output for February and March. With external demand in export markets shrinking and potential supply chain barriers in place, both the volume of exported goods and the export unit value of goods are expected to decline in the coming months, revealing the real impact of the Covid-19 crisis on the foreign trade in goods.
Following a weak increase in January and February, the decrease in imports of goods in March did not come as a great surprise. March saw a collapse in consumer sentiment, inter alia, with regard to employment expectations in the coming month, thus leading to a reduced household appetite for consumption. Imports of intermediate and capital goods had already been on a downward path for quite some time now. Combined with the news about the Covid-19 outbreak in Europe in March, the conditions were unlikely to inspire optimism in businesses concerning the expansion of output volumes of goods and new investment in the months to come. Moreover, the falling global oil prices and abating domestic demand led to a decrease in the value of imports of mineral products, and the trend is expected to persist in the coming months.
Overall, the impact of the Covid-19 pandemic on foreign trade will become more evident in the months to come; however, certain indications (sentiment, output volumes and growth forecasts of trade partners) already suggest a steep decline in the value of exports and imports in the coming months.