Central Europe’s economies should reform to respond to slowing trade growth, IMF says

Central Europe's export-dependent economies face risks from slowing world trade growth, which could be mitigated with reforms and the removal of remaining trade barriers in the EU, the International Monetary Fund said.

Central European nations are among the European Union's most reliant on foreign trade, with exports as a share of output ranging from 92% in Slovakia to 69% in the Czech Republic, based on 2023 Eurostat data, with only Romania's 39% below the bloc's average.

U.S. President Donald Trump's plan to impose 25% tariffs on imports from the bloc is likely to hurt growth in the export-oriented region, though Poland, the region's largest economy, is seen as less exposed, S&P Global said last week.

"In recent decades, the CEE (Central and Eastern Europe) region has benefited substantially from rising participation in global value chains," the IMF's Senior Regional Representative for Central, Eastern and Southeastern Europe, Geoff Gottlieb told Reuters.

"However, this model is facing headwinds because global trade growth has started to slow, falling from 6% in 2000-19 to 3% in 2022-24," he said in an emailed response to Reuters questions.

Gottlieb said central European nations should focus on what was in their control, pursuing reforms to boost productivity and raise living standards, while pushing for the elimination of "significant" existing trade barriers within the EU.

He also said efforts were needed to ensure that central European companies face no unnecessary costs when seeking to compete abroad, adding that any emerging industrial policy should be coordinated at the EU level.

A November 2024 IMF survey showed the main barriers included poor border infrastructure, procurement rules or the lack of harmonised rules within the bloc, with the services sector suffering from even higher trade barriers.

"Continued efforts towards a deeper single market would support firm growth by lifting constraints related to market size," it said.