Central Europe’s economies face dangers from slowing commerce, tariffs, IMF warns

By Gergely Szakacs

BUDAPEST (Reuters) – Central Europe’s export-dependent economies face dangers from slowing world commerce development and tariff threats, which could possibly be mitigated with reforms and the elimination of remaining commerce boundaries within the EU, the Worldwide Financial Fund stated.

Central European nations are among the many European Union’s most reliant on international commerce, with exports as a share of output starting from 92% in Slovakia to 69% within the Czech Republic, primarily based on 2023 Eurostat knowledge, with solely Romania’s 39% beneath the bloc’s common.

U.S. President Donald Trump’s plan to impose 25% tariffs on imports from the bloc is more likely to harm development within the export-oriented area, although Poland, the area’s largest financial system, is seen much less uncovered, S&P World stated final week.

“In current many years, the CEE (Central and Jap Europe) area has benefited considerably from rising participation in international worth chains,” the IMF’s Senior Regional Consultant for Central, Jap and Southeastern Europe, Geoff Gottlieb instructed Reuters.

“Nonetheless, this mannequin is dealing with headwinds as a result of international commerce development has began to sluggish, falling from 6% in 2000-19 to three% in 2022-24,” he stated in an emailed response to Reuters questions.

Gottlieb stated central European nations ought to deal with what was of their management, pursuing reforms to spice up productiveness and lift dwelling requirements, whereas pushing for the elimination of “important” present commerce boundaries throughout the EU.

He additionally stated efforts have been wanted to make sure that central European corporations face no pointless prices when looking for to compete overseas, including that any rising industrial coverage must be coordinated on the EU stage.

A November 2024 IMF survey confirmed the primary boundaries included poor border infrastructure, procurement guidelines or the dearth of harmonised guidelines throughout the bloc, with the providers sector affected by even greater commerce boundaries.

“Continued efforts in the direction of a deeper single market would help agency development by lifting constraints associated to market dimension,” it stated.

(Reporting by Gergely Szakacs; Modifying by Tomasz Janowski)