Czech foreign trade deficit reaches near record-high
The Czech foreign trade deficit in July reached 19 billion CZK, well beyond even the most pessimistic expectations. Although the general slow-down in the European Union is working against Czech exports, there is still a chance of lowering the deficit by taking advantage of the weak US dollar. Vladimir Tax reports.
July's deficit of 19 billion CZK or just over half a billion USD is the second highest in Czech history, after a 23 billion CZK deficit in December 2000. For the first seven months of this year the deficit reached 72 billion CZKs or nearly 2 billion USD, which is around 30 percent more than in the year 2000.
One of the main factors behind July's development was a substantial increase in imports of machinery which surpassed exports. Until now, Czech machinery exports were higher than imports.
While Czech GDP keeps growing at a pace of 3 percent, a slowdown in Germany is limiting Czech export possibilities. However, analyst Petr Zahradnik from the Conseq Finance company, sees a chance for improvement in the Czech balance of trade in the currently weak US dollar.
"The Czech Republic is very much dependant on imports of raw materials and raw materials are usually denominated in the US dollar. I think that especially for imports of oil and gas, it means slightly lower prices and a positive impact on the import side of the Czech trade balance."
So, what is the outlook for the whole of 2001?
"In general, I would say that the trade deficit in 2001 can be around 130 billion CZK, which is slightly less than the initial expectations at the beginning of this year and only a slightly higher figure in comparison with last year. So, I think that in general, the situation of the trade balance will be very similar to that of 2000."