Foreign trade ends in record surplus in 2009

Prague, Feb 8 (CTK) - The Czech Republic's foreign trade ended with a record Kc153.2bn surplus last year, Kc85.9bn higher than in 2008, the Czech Statistical Office (CSU) announced Monday.

In December, there was a Kc2.8bn surplus, a year-on-year improvement by Kc11.9bn.

"Exports and imports may be only a partial factor in the development of the Czech economy but their influence is fundamental. Therefore the development of foreign trade balance in the last months may signal a gradual revival of the Czech economy. For the whole of the year, the trade result was being positively influenced by favourable terms of trade," Jaroslav Vomastek of the Industry and Trade Ministry commented on the data.

The Confederation of Industry believes that moderate optimism is the correct stance.

"The growth in foreign orders at the end of the year signals further rebounding from the bottom, at least in the horizon of the nearest months, and at the same time shows its fragility. Revival in the USA and Asia offers hope. There are uncertainties concerning further development in the EU, in particular in Germany when governments in the EU start cutting public spending," the Confederation's analyst Oldrich Koerner noted.

There was a Kc14.5bn surplus already in November 2009, while in November 2008 there was a Kc1.1bn deficit, Vomastek recalled.

"The December figure is by no means different from the whole year's trend. Also, exports in November for the first time since September 2008 in a year-on-year comparison got to the level of the previous year," he noted.

The car industry was the driving force of Czech exports also last year. Czech car makers and their sub-suppliers benefitted from car-scrapping subsidies in European countries, in particular in Germany and France.

"Car exports grew by 12.5 percent last year compared with 2008. Exports to Germany, for example, jumped by over a third in total with the car-scrapping premium, and in March even by 125 percent," Vomastek noted.

State support will be of key importance for the companies' gaining of new sales territories with the coming revival of demand on foreign markets, in particular state assistance in the financing of export orders, Koerner said.

"Pro-export state support is important for the competitiveness of companies exhausted by the recession and their struggle for gaining money. Exports are expected to be the only source of moderate renewal of economic growth in the Czech Republic and the EU," he added.

The trade surplus was the highest since 2005 when there was a surplus for the first time since the Czech Republic's establishment. There have been annual surpluses ever since.

Compared with 2005, the 2009 surplus was nearly four times higher, and against 2008 it more than doubled.

Favourable development of terms of trade raised the trade surplus by some Kc57bn yr/yr, according to estimates.

"In the year 2009, according to the estimation, external trade balance in the prices of the year 2008 stood at about Kc96bn," the CSU said.

Trade turnover decreased, however, and returned roughly to the level of 2006, being even a bit lower than in that year.

In the year 2009, compared with the previous twelve months, exports and imports were down by 14.1 percent and 18.1 percent, respectively. Exports were worth Kc2,125bn and imports Kc1,972bn.

Favourable effect on the development of the total balance came from trade in mineral fuels lubricants and related materials (deficit down by Kc58.9bn), manufactured goods classified chiefly by material (surplus up by Kc22.6bn), crude materials, inedible, except fuels (surplus up by Kc12.1bn), chemicals and related products (deficit down by Kc10.8bn) and miscellaneous manufactured articles (surplus up by Kc1.9bn).

Decreases in surplus in machinery and transport equipment and beverages and tobacco (by Kc16.8bn and Kc1.2bn respectively) and increases in deficit in food and live animals and animal and vegetable oils, fats and waxes (by Kc1.8bn and Kc1bn respectively) affected the trade balance unfavourably.

Compared with December 2008, exports rose by 4.8 percent and imports dropped by 2.8 percent at current prices, the most favourable results since September 2008.

The crown's appreciation against the US dollar resulted in growing exports (+14.4 percent) and imports (+6.3 percent) in US dollars.

An insignificant appreciation of the crown to the euro implied an increase in exports by 4.9 percent and a decrease in imports by 2.5 percent, both in euros. December 2009 had one working day more than December 2008.

The trade balance showed a surplus of Kc2.8bn, which was by Kc11.9bn better result, year on year.

December trade balances have been always negative since the establishment of the Czech Republic; the deepest trade gap was recorded in December 2001 (Kc21.2bn).

Curbing of the deficit in trade in mineral fuels, lubricants and related materials (by Kc4bn) had the most favourable influence on the total trade balance.

Machinery and transport equipment showed a growth of surplus by Kc2.6bn; and trade balance in manufactured goods classified chiefly by material, crude materials, inedible, except fuels and miscellaneous manufactured articles improved by Kc2.8bn, Kc1.6bn and Kc1.4bn, respectively, as deficit turned into a surplus.

Slightly worse figures were observed in beverages and tobacco (down by Kc0.4bn as surplus turned into a deficit), chemicals and related products and food and live animals (both deficits up by Kc0.1bn).

Total exports in machinery and transport equipment were up by 5.6 percent (Kc4.8bn). Higher exports were recorded mainly in road vehicles, electrical machinery, apparatus and appliances and office machines, automatic data-processing machines.

Imports of machinery and transport equipment grew by 3.1 percent. The biggest increases came from electrical machinery, apparatus and appliances, office machines and automatic data-processing machines, and road vehicles.

Falling imports of mineral fuels, lubricants and related materials by 19.8 percent owed mainly to lower imports of crude petroleum (-18.1 percent in value, -16.2 percent in volume). Imports of natural gas dropped by 39.9 percent in value and rose by 20.7 percent in volume.

The December foreign trade figure was only slightly below the average market expectations.

"A neutral result brings mixed signals. This was the first surplus for December in history and for the first time since September 2008 there was a year-on-year growth in exports, while imports keep falling," said Komercni banka analyst Jan Vejmelek.

"The improvement can be ascribed mainly to lower deficit in trade in mineral fuels and a growth in trade in machinery and road vehicles. So exports were helped mainly by higher external demand stimulated by fiscal impulses like the car-scrapping subsidies whose end will cause opposite effects in the coming months. Imports fell due to low economic activity and weak consumer demand," he added.