Figare 1: CEFTA trade with EU (1992-1998) in Billion ECU

In 1993 imports grew by 75% while exports only grew by 53 %, compared to 1992. This year alone gave rise to a trade-deficit of approximately 5 billion ECU. In 1996 the deficit grew further when imports from EU countries increased by 20% and exports lagged behind at a growth of only 6% compared to 1995. The trade deficit reached approximately 8 billion ECU. Although since 1997 there is a tendency to balance exports and imports, CEFTA countries still maintain an export/import-ratio of 3/4 (for every unit of import, 0.75 unit of export realised). In the first three-quarters of 1998 the growth of CEFTA imports was less then that of CEFTA exports. However, the difference in their growth was not sufficient to avoid an increase in the trade deflcit, which grew by 1.6 billion ECU during this period. It is expected that the trade deficit will reach about 22 billion ECU in 1999. In order to keep the trade deficit at the same level, export should grow by 34% more than imports at least. Consequently, to diminish the trade deficit, import growth should slow down and export growth should increase so that their growth difference exceeds 34%.

Figure 2: Trade between Bulgaria and the EU (1992-1998 ) in Billion ECU
Note: Data received from DGII of the European Commission. ‘January to September 1998. Annual rate of change is calculated over the same period of 1997.

Total CEEC exports to the European Union trading partners increased by more than 8 billion ECU between 1997 and 1998. In this period the growth of exports to each of the European Union trading partners was positive and resulted in a total export growth of 20% compared to previous years.

The rowth increased for CEEC exports to Germany and France respectively from 18% (1997) to 22 %(1998) and from 5%(1997) to 28% (1998). The CEEC growth of exports to other countries of the European Union decreased between 1997 and 1998. This holds for all four countries: Italy, the United Kingdom, Austria and the Netherlands. However, the shares of the six major export markets in total CEEC exports to the European Union have remained stable, except for France growing by one percent and the Netherlands decreasing by one percent in the same period.

Total Bulgaria exports to the EU increased by 175 million ECU in 1998 compared to 1997. This represents an increase of 11%, which is below the average export growth of the CEEC of 20% in the same period.

The main export partners of Bulgaria are more diversified than that of CEEC and Bulgaria is less dependent on Germany than other CEEC.

The three main export partners of Bulgaria are respectively Italy, Germany and Greece.

Austria, which is an important export market for the CEEC, is a small export market for Bulgaria representing only 4% of Bulgarian exports to the EU in 1998 (Figure 4).

Figure 4: Bulgaria’s main EU export partners (Jan-Sep 1998)

While total Bulgarian exports to the European Union grew in 1997-1998, this did not hold for each of its export partners. For instance, Bulgarian exports to Greece slightly decreased in 1998 while exports to Belgium and Luxembourg doubled from 4% of Bulgaria’s total export to the EU in 1997 to 8% in 1998.

In 1998 the main trading partners of the CEEC in imports were the same countries as those in exports. Germany holds a share of 41% followed by Italy with 12/o, Austria and France each with 8% and UK and the Netherlands with 5% (Figure 5).

Figure 5: Main trading partners of CEEC in import [Jan-Sep 1998)

Import growth from the European Union to CEEC decreased in 1998 compared to 1997. This holds for most countries, except for those from Germany, which slightly increased in this period. CEEC import from Austria and the United Kingdom decreased significantly. The overall growth of CEEC imports from the European Union dropped from 24% in 1997 to 17 % in 1998. Since CEEC export growth did not change in 1998, lower growth of CEEC imports reduced growth of the CEEC trade deficit in 1998.

Figure 6: Bulgaria’s main EU import partners (Jan - Sep 1998)

Bulgarian imports from the EU increased by 500 million ECU or by 40% in 1998 compared to 1997, while the average increase of CEEC imports from the EU was 17% over the same period. This led to a trade deficit of 50 million ECU in 1998 against a surplus of 270 million ECU in 1997. The increase was generated mainly by imports from Germany, Greece, France, Austria, Belgium and Luxembourg. Bulgaria’s two main import partners are Germany and Italy, which accounted for almost half of the country’s imports from the EU in 1998.

In 1998 textiles, base metals and agriculture accounted for 63% of Bulgarian exports to the EU. However, the three sectors represent only a small share in the total exports of other CEFTA countries to the EU (Table 1.1). Only Romania, where the three sectors represent 58 % of its total export to the EU in 1998, comes in the neighbourhood of Bulgaria. We could therefore conclude that Romanian export structure is similar to that of Bulgaria. Polish exports in these three sectors is also significant, but less important than for Romania and Bulgaria. The three sectors represent only 35% of Poland’s total exports to the EU. For the other CEFTA countries, the three export sectors hold a minor share of their total exports to the EU, an average of 23% in 1998.

In the year 1998 the export sectors machinery & electrical equipment and transport equipment experienced the strongest growth in the Czech Republic, Slovakia and Hungary. Poland, Romania, Bulgaria and Slovenia experienced a lesser growth in these sectors. These two sectors account for 50% of the total exports of Hungary to the EU in 1998. For the Czech Republic, Slovakia and Slovenia the share of machinery & electrical equipment and transport equipment together exceeds 40% of their total export to the EU. In comparison, Poland, Romania and Bulgaria have much smaller share in these two export sectors, respectively 26%, 9% and 8% of their total exports to the EU.

Comparing Bulgarian exports to the EU to those of other CEFTA countries, we can conclude that Bulgaria, Romania and Poland have similar export structures.