Minister: Right steps could see Czechia boost international trade position

Photo: Michael Gaida, Pixabay / CC0

Nearly a half of total Czech economic output is dependent on exports. In view of this, the government is relying on a four-pronged strategy through which it aims to maintain, and possibly even strengthen, the country’s international trade position, the industry and trade minister said on Tuesday. 

The Czech Republic has seen several years of continued economic growth, but is now having to tackle the large-scale impact of the coronavirus pandemic. The export-oriented economy has already seen foreign trade decline substantially this year.

However, in relative terms, this fall is smaller than initially feared, Industry and Trade Minister Karel Havlíček said at a special trade focused briefing on Tuesday.

“We are keeping the fall from exceeding 10 percent. That is one of the best rates in Europe. April and May were the critical months, when the rate of year-on-year decline was close to 40 percent. However, June and September showed positive trends. In fact, September actually saw foreign trade grow by 2.2 percent in year-on-year terms.”

The September growth was boosted in a large part by the automotive sector, which is less impacted than in most other EU states, Mr. Havlíček said.

Karel Havlíček, photo: archive of the Office of Czech Government

However, the level of imports across all commodities fell in September. This, the ministry believes, is the result of a decrease in demand, which is likely to be mirrored in October and November statistics.

The relatively low decrease of foreign trade is in part thanks to the Czech Republic’s major economic dependency on Germany, according to the minister.

“When we look at the situation territorially, we see how dependent the trade situation is on the level of impact the coronavirus has on each country. Germany, the target of one-third of all of our exports, saw a decline in trade of around 9 percent. Meanwhile, our trade with countries such as Britain, France and Spain, which had a significantly more severe coronavirus situation, fell by around 20 percent.”

This territorial lens could provide an indication of how Czech foreign trade will be impacted in the coming months, Mr. Havlíček said.

In order to ensure Czech trade not only remains competitive, but also has the potential to grow further, the minister said four pillars of support were needed: employment support, loan guarantees, investment support and ensuring science, research and innovation get sufficient funding.

The government budget allocated to loan guarantees is still nowhere near exhausted, the minister said. Meanwhile, in terms of investment support, the government is preparing legislation that would enable companies to postpone their incentive obligations, if they can prove these could not be met due to the effects of the pandemic.

However, the minister said that not all the self-employed will be able to rely on government support. The Czech Chamber of Commerce has highlighted this as vital, saying it would like further negotiations with the government on how the support measures will work in practice.