Business News

Czech foreign trade deficit reaches near record-high

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In July the Czech foreign trade deficit reached 19 billion CZK or just over half a billion USD, well beyond even the most pessimistic expectations. July's deficit is the second highest in Czech history, exceeded only by the 23 billion CZK deficit in December 2000. For the first seven months of this year the deficit reached 72 billion CZK or nearly 2 billion USD, which is around 30 percent more than this time last year.

New hopes for Czech aerospace industry?

According to media reports, the largest Czech aircraft maker, Aero Vodochody, is bidding for a contract worth tens of millions of USD to modernize Russia's fleet of military trainer jets. The contract would give the Czech aerospace industry a significant boost as Aero has a large number of local suppliers . While Aero is eyeing Eastern markets, several other Czech aerospace companies could participate in offset programs brought to the country by BAE SYSTEMS and Saab, in their bid to equip the Czech army with new fighter jets. The consortium has offered offset programs of 150 percent of the value of the potential contract. Some of the projects in the offset program involve the aircraft makers Moravan Otrokovice and Let Kunovice, as well as the aircraft parts producer Jihlavan.

Meanwhile, the Anglo-Swedish consortium BAE-SYSTEMS - Saab said the price of 24 Gripen supersonic multi-role combat aircraft would be under 50 billion crowns (or 1.3 billion USD) if the Czech government was prepared to accept their offer. The government has yet to decide whether or not to replace the Czech Air Force's aging fleet of Soviet-made MiG-21s. Representatives have said that due to lack of funds in the state budget, the new purchases may not occur. BAE Systems-Saab remain the only bidder in the public tender for 24 or 36 fighters following withdrawal by two European and two U.S. groups.

Weak dollar may do Czech economy good

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In the last month the US dollar has weakened by no less than three Czech crowns. Although the development has been welcomed as a positive boost for the Czech trade balance, economic experts differ in evaluating its significance. Analyst Petr Zahradnik from Conseq Finance believes that a certain weakening of the dollar was inevitable and that it would help the Czech economy in two ways.