Michigan State University Extension
Extenstion International Trade Res. - 10179509
03/31/96
U.S. exports to Central and Eastern Europe (Bulgaria, Czech Republic,Slovakia, Hungary, Poland, and Romania) in fiscal 1995 are projected to decline slightly from the previous year. Oilseed exports are expected to rise significantly, with the principal customers being Romania and the Czech and Slovak Republics. However, exports of animal products and grains, which accounted for most U.S. exports in fiscal 1994, are projected to decline. Grain exports are down because of higher regional output. The outlook for U.S. animal product exports is clouded by increasingly protectionist policies in the Central and Eastern European countries (CEEs). Poultry exports, which account for the bulk of animal product exports, have been particularly affected. Poultry exports to Poland during January-April 1995 are down 31 percent from a year earlier because of Poland's introduction of variable levies on poultry meat. Under pressure from domestic producers, Romania imposed import surcharges on poultry, which effectively raised the minimum import price to $2,515 per metric ton. As a result, January-April 1995 poultry exports to Romania plunged 53 percent from a year earlier.
Macroeconomic Outlook Improves
CEE economies all returned to positive growth in 1994. GDP growth ranged from 1 percent in Bulgaria to 4 percent in Poland. The agricultural sectors all saw positive growth, as well; the exception was Poland, where agricultural output fell 10 percent due to an exceedingly hot, dry summer. However, growth registered in the other countries was from an extremely low level in 1993, and agricultural output is still well below the levels of the late 1980s. The outlook for 1995 is for continued positive growth overall, but still sluggish increases in agricultural output.
Bulgaria is a marked exception to the generally positive trends noted in the other five countries. While Bulgaria achieved small positive GDP growth, inflation accelerated to 120 percent, compared with 80 percent in 1993, and its currency, the lev, lost close to half its value during 1994. Agriculture continues to suffer severe disruptions caused by the prolonged confusion surrounding land restitution. Problems in agriculture are exacerbated by government policies which, in the name of food security, tend to tax producers.
Elsewhere, however, the positive macroeconomic indicators mask the fact that much of the population of the region has still not seen a return to its former standard of living. Unemployment hovers around 12 percent or higher in many of the countries and many people work two jobs. Food prices, after their initial surge in the early 1990's, have largely stabilized, except in Poland, where drought-reduced supplies have pushed up prices. Throughout the region, however, people spend 60 percent or more of their income on food. The resulting discontent has found expression in the election of the former Socialists in all but the Czech Republic. There is also a pronounced trend towards increasing intervention in agriculture.