The Impact of Energy Prices on CEE Countries: Trade Balances and Imports
Aa
Share
CEE exposure to energy inputs As all the selected CEE countries under our coverage are energy importers, commodity prices are an important contributor to trade balances and domestic prices.
As of 2022, at the time of the spike in commodity prices, energy products accounted for 9-15% of CEE merchandise imports and 27% of Turkey’s imports. The import dependency of the local energy consumption varies from 28% in Romania to 54-64% in the rest of CEE and is as high as over 70% in Turkey.
Meanwhile, the direct share of energy, including consumer prices for fuel and energy prices in the domestic CPI basket is 11-18%. Based on these indicators, Czech Republic’s trade balance and CPI at a first glance appears the least vulnerable to energy price swings, Hungary and Turkey appear more sensitive on the trade balance side, while Poland is more sensitive on the local price front.
CEE exposure to energy inputs
Energy price trends:
impact on CEE imports Commodity prices increased for two years over 2021 and 2022. The IMF’s index of energy prices, including oil, natural gas and coal went up 100% in 2021 and 64% in 2022.
The increases had a straightforward effect on the trade balances of the selected CEE countries through a respective increase in nominal imports. Each 10% increase or decline in the energy price index in the past three years resulted in, on average, a 7-8% change in energy imports. In nominal terms, that corresponds to a US$0.7bn increase or decline in annual imports for Romania, c.US$1.2bn for the Czech Republic and Hungary, US$2.1bn for Poland, and US$4.5bn for Turkey.
In 2022, higher energy imports contributed around 43-59% to the increase in the overall merchandise imports in our selected CEE countries, with the Czech Republic on the lower border of the range and Hungary on the upper.
Unsurprisingly, higher energy prices were also the primary reason for the worsening in the trade deficits in most of the countries. Now, the reversal in the price dynamic should have the opposite effect. However, a return to 2021 price levels will not result in an equivalent nominal reduction in energy imports due to a likely inertia in contract prices versus spot prices.
Fuel imports per 10% global price change, 2020 to 2022
