Czech exports reach all-time high
Czech exports reached a record 3.9 trillion crowns in 2015, an increase of 7.2 percent year on year. Although exports to Russia dropped by over 30 percent higher exports to the county’s traditional EU partners made up for the difference. I asked the chief economist of Era Poštovní Spořitelna, Jan Bureš about the driving force behind the increase and its sustainability.
There is also the impact of the weak crown. Is this growth sustainable long–term?
“Of course Czech exporters also benefitted from the weak crown and especially from the stability of the exchange rate – that is something that is important for Czech exporters, that they do not have to manage the exchange rate risk on a daily basis and they can be pretty comfortable with a relatively low-volatile crown. Nevertheless, I do not believe this is the main factor behind the success of Czech exporters and I am pretty confident that Czech exporters would be able to withstand a stronger crown even now. Looking ahead there is probably no reason to worry since the central bank promised to keep the forex intervention regime in place for the entire year. In 2017 we will see, but I believe that a relatively reasonable strengthening of the crown would not hurt Czech exporters significantly.”
Over 83 percent of exports are destined for the EU, which means that efforts to diversify have not been very successful. Do you see this as a major problem at this point?