Czech external trade reached a surplus of CZK 13.1bn in January

March 9, 2010

January's surplus of the external trade balance reached CZK 13.1bn, being
only moderately below our expectations. Seasonally adjusted, the commodity
balance improved CZK 0.9bn; however, the ex-commodity balance deteriorated
CZK 7.5bn. Overall, we therefore see sights of deterioration (from CZK
14.9bn to CZK 8.4bn on the seasonally adjusted basis). Foreign car-scrap
subsidies should no longer be helping Czech car exports, and the inventory
cycle should soon be at its bottom. Furthermore, the commodity balance could
start to deteriorate in the future as well, in the case of increasing
commodity prices. The relatively high export dynamics in January are
positive, as exports rose 9.1% yoy, while imports grew only 3.5%.
According to the CSO, the trade balance showed a surplus of CZK 13.1bn,
which was CZK 9.2bn more, year on year. January trade balances have been
always in the black since 2004. Year-on-year growth of CZK 6.3bn in surplus
in machinery and trade equipment contributed primarily to the increase in
total trade surplus. The trade balance improved in miscellaneous
manufactured articles CZK 2.3bn as the deficit turned into a surplus. The
deficit fell in trade in mineral fuels and chemicals CZK 1.0bn and 0.5bn
respectively; and the trade surplus in crude materials rose CZK 0.5bn. On
the other hand, surplus in the trade in manufactured goods classified
chiefly by material and beverages and tobacco dropped CZK 1.3bn and CZK
0.3bn respectively; and trade in food and live animals saw a slight
deepening in the deficit of CZK 0.1bn.
Foreign trade surplus will decrease this year. A certain revival of foreign
demand may lead to higher exports this year (we expect exports to increase
4.7% yoy, after a fall of 14.1% in 2009); however, inventories will have to
be rebuilt at least partially, which will result in higher imports as well
(+7.5% yoy after -18.1% yoy in 2009). The commodity balance has started to
deteriorate in Q309 already, due to higher commodity prices. This trend
should continue in the upcoming quarters as well. Overall, we expect the
foreign trade balance to deteriorate this year, from the record-breaking
surplus of CZK 152.0bn reached in 2009 to CZK 100.7bn.
January's foreign trade statistic did not bring any crucial news from the
Czech currency's point of view. However, the data can be overall regarded as
positive (respectable growth of exports and higher-than-expected surplus,
compared with the market consensus). The Czech crown is nowadays on an
appreciating trend, being helped among others by an increasing risk appetite
of investors (as indicated for example by growing stock markets).