March sees large decline in services trade, as travel segment contracts by more than half

The initial indicators confirm that the economy took a sharp downturn going into the second quarter. Banka Slovenije can report that international trade fell significantly in March, largely as a result of the measures to curb the coronavirus pandemic introduced at home and abroad in that month. With merchandise imports declining by even more than merchandise exports, the merchandise trade surplus strengthened again. The measures hit trade in services particularly hard, most notably imports and exports of travel services.

The current account surplus strengthened further in the first quarter of this year, primarily as a result of an increase in the merchandise trade surplus. Weak merchandise imports saw it begin to widen in the final quarter of last year, while in the first quarter of this year a further push came from the domestic and foreign measures to curb the coronavirus pandemic, and from falling energy prices. Having already declined in year-on-year terms in the first two months of the year, merchandise imports were down fully 12% in March, a little more than the decline of 10% in merchandise exports, which thus widened the merchandise trade surplus.

March’s year-on-year declines in imports and exports of services were even larger (at 13% and 17% respectively); the hardest-hit segment of travel services contracted by more than a half as borders closed. Despite March’s decline, the surplus of trade in services, in which transport services and travel services remained the largest factors, remained at a similar level to a year earlier in the first quarter of this year. Because most countries imposed their strictest lockdown measures in mid-March or later, these declines do not yet reflect the full magnitude of the crisis induced by the pandemic. 

The deficit in primary income in the first quarter was slightly smaller than in the same period last year, as a result of a small decline in outflows to equity holders. The deficit in secondary income also narrowed slightly in year-on-year terms, as a result of a decline in outflows from the government sector and other sectors. 

Year-on-year change in current account items, EUR million