The Czech Republic announced a record Kč 10.5 billion trade surplus in December, exceeding analysts’ most optimistic expectations and contributing to a record trade figure for the year.
“It was very good figure for December, given that in past years we have become used to deficits or slight surpluses,” commented Patria Finance analyst Tomáš Vlk. The positive figure helped push the country’s 2011 trade surplus to a record Kč 191.4 billion, an around Kč 70.2 billion improvement on the surplus for 2010.
The Czech Statistical Office (ČSÚ) said Tuesday that the main factor in the surging annual surplus was exports of cars and machinery, where the 2011 trade balance was Kč 105.3 billion better than 2010. On the other hand, the year-on-year deficit in mineral fuels rose by Kč 38.2 billion and in chemical products by Kč 18.8 billion.
Czech trade with the EU ended with a surplus of Kč 670.4 billion, up Kč 71.9 billion on 2010. Trade surpluses were improved to the tune of Kč 32.1 billion with the Czech Republic’s biggest commercial partner, Germany; by Kč 14.1 billion with France; and Kč 14.0 billion with neighboring Slovakia. Deficits with the US and Russia were curbed but the trade deficit with China ballooned by Kč 31.2 billion.
In spite of the upbeat figures, the highly export-dependent Czech economy is looking to lighten reliance on sales to the rest of Europe and deepen its markets away from the recession threatened continent.
Patria Finance’s Vlk warned that 2011’s export success story would not be repeated this year. “We are forecasting lower sales volume given the worsening predicted state of demand in the eurozone. The trade surplus could stay relatively quite high even though we expect a slight reduction compared with previous years,” he added.
‘Everyone knows what is happening in the world economy and in the European Union.’
Czech Prime Minister Petr Nečas (Civic Democrat, ODS) and Minister of Industry and Trade Martin Kuba (ODS) on Monday outlined an export strategy for the country until 2020 that will seek to reduce reliance on the European market.
“Everyone knows what is happening in the world economy and in the European Union,” said Nečas, hinting at the fact some EU countries have already slipped into recession and others appear on the brink. Around 80 percent of Czech exports currently head towards other EU countries with just under a third of overall foreign sales going to Germany.
Priority targets for non-EU export growth include Russia, Ukraine, Turkey, Serbia, Iraq, China, Brazil, India, Kazakhstan, Mexico, Vietnam and the US. These countries account for around a third of exports worldwide but only around 12 percent of Czech exports at the moment.
The Czech prime minister said one of the problems facing domestic exporters was that they were often sub-contractors for other companies and lacked direct contact with the final customer. They lost out in this way on the biggest margins on deals, he added.
There were also fewer and fewer Czech companies responsible for shipping products abroad, Nečas said. “That is why the state must do all it can to widen the spectrum of our exporters to smaller and mid-sized companies.” The overall number of exporters has slipped in recent years to around 10,000 targeting EU countries and 11,000 countries outside the EU compared with just under 13,000 and around 16,000 respectively in 2007, according to figures from the government presentation.
Concrete steps to boost exports include higher export guarantees and insurance covered by the state and stepped up Czech ministry trade missions in target countries.
Exports of goods and services accounted for 79 percent of Czech Gross Domestic Product (GDP) in 2010, up from 51 percent of GDP in 1995 and 63 percent in 2000.