IMF: Central Europe’s Economies Face Challenges Due to Global Trade Slowdown

IMF Warns of Global Trade Slowdown Risks for Central Europe’s Export-Dependent Economies

The International Monetary Fund (IMF) has stated that export-dependent economies in Central Europe face risks due to the slowdown in global trade growth. However, these risks can be mitigated through trade reforms and the removal of remaining trade barriers within the European Union.

Foreign Trade in Central Europe: Numbers and Challenges

Central European countries are among the most reliant on foreign trade within the European Union. According to Eurostat data from 2023, exports as a percentage of GDP range from 92% in Slovakia to 69% in the Czech Republic.

In this context, Standard & Poor’s Global pointed out that former U.S. President Donald Trump’s plan to impose a 25% tariff on imports from the EU is likely to negatively affect growth in the export-oriented region. However, Poland, the largest economy in the region, is considered less exposed to these risks.

Global Trade Slowdown: Impact on the Region’s Economies

Jeff Gottlieb, IMF’s first regional representative for Central and Eastern Europe and Southeast Europe, stated that the region has greatly benefited in recent decades from increased participation in global value chains. However, with the slowdown in global trade, which decreased from 6% between 2000 and 2019 to 3% between 2022 and 2024, the economic model relied upon by the region is facing challenges.

Reforms and EU Coordination: The Path to Overcoming Challenges

According to Gottlieb, Central European countries should focus on domestic reforms aimed at boosting productivity and raising living standards. He stressed the need to work toward eliminating significant trade barriers within the European Union, including improving border infrastructure and harmonizing procurement rules.

He added that any new industrial policy should be coordinated at the EU level to ensure that companies in the region do not face unnecessary costs when competing in global markets.

Survey Results: Trade Barriers Hampering Growth

A survey conducted by the IMF in November 2024 revealed that key trade barriers in the region include weak border infrastructure, inconsistent rules within the EU, and higher trade barriers in the services sector. These factors require significant reforms to ensure sustained economic growth and fully leverage the economic potential of the countries.

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Sources:

• International Monetary Fund
• Eurostat Data, 2023
• Standard & Poor’s Global