Czech trade numbers show surprise deficit of 600 mln crowns in August

Oct 8, 2007 - The Czech Republic showed a deficit on foreign trade of 600 mln crowns in August, surprising on analysts' consensus expectations of a 1 bln crown surplus, data today showed.

But data released by the Czech statistical office (CSU) showed that year-on-year, the deficit shrank by 500 mln crowns, and the numbers left intact expectations that the former communist country's trade surplus will double overall this year.

The Czech Republic's currency the crown, which hit fresh all-time highs on Sept 17 at 27.385, was unmoved by the data.

"It was a (negative) surprise although not a big surprise," said Jan Vejmelek, an analyst with Komercni Banka. He expects the full year 2007 trade balance to end in a 59 bln crown surplus, up from a surplus of 39.8 bln crowns in 2006.

Trade balances in other central European former communist economies have worsened in recent quarters as strong currencies have hurt their exporters, whilst imports have increased on the back of booming domestic demand. But the Czech Republic continues to be supported by multinational investments, which use low local wages and costs to produce cheaply and export to elsewhere in the enlarged European Union.

The statistical office also said that the August trade balance was hit by a 1.4 bln crown drop in the surplus on trade in cars and machinery, where local Volkswagen and Peugeot factories remain a key net exporter.

Exports grew 12.1 pct annually, the slowest growth rate since September 2006. Imports rose just a touch slower, by 11.7 pct.

David Navratil from Ceska Sporitelna said the trade balance from the previous 12 months was at a surplus of 68 bln crowns and for the whole year of 2007 he expects it to reach 70 bln crowns.