Identifier
Created
Classification
Origin
06PRAGUE119
2006-02-06 15:36:00
UNCLASSIFIED
Embassy Prague
Cable title:  

CZECH REPUBLIC: FOREIGN TRADE SURPLUS FIRST IN

Tags:  ECON ETRD EZ 
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VZCZCXRO7261
RR RUEHAG RUEHDF RUEHIK RUEHLZ
DE RUEHPG #0119 0371536
ZNR UUUUU ZZH
R 061536Z FEB 06
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC 6909
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/WHITE HOUSE WASHINGTON DC
UNCLAS PRAGUE 000119 

SIPDIS

SIPDIS

STATE FOR EB/TPP. EUR/ERA, EUR/NCE
STATE PLEASE PASS USTR LISA ERRION
COMMERCE FOR ITA/MCA/EUR MIKE ROGERS
TREASURY FOR OASIA ANNE ALIKONIS

E.O. 12958: N/A
TAGS: ECON ETRD EZ
SUBJECT: CZECH REPUBLIC: FOREIGN TRADE SURPLUS FIRST IN
HISTORY AND FIRST AMONG THE VISEGRAD-4

REF: A. 05 PRAGUE 1677


B. 05 PRAGUE 1686

UNCLAS PRAGUE 000119

SIPDIS

SIPDIS

STATE FOR EB/TPP. EUR/ERA, EUR/NCE
STATE PLEASE PASS USTR LISA ERRION
COMMERCE FOR ITA/MCA/EUR MIKE ROGERS
TREASURY FOR OASIA ANNE ALIKONIS

E.O. 12958: N/A
TAGS: ECON ETRD EZ
SUBJECT: CZECH REPUBLIC: FOREIGN TRADE SURPLUS FIRST IN
HISTORY AND FIRST AMONG THE VISEGRAD-4

REF: A. 05 PRAGUE 1677


B. 05 PRAGUE 1686


1. The Czech Republic posted a trade surplus in 2005 for the
first time in its history, thanks to its automobile industry
surge in export-oriented foreign direct investments (FDI).
Local media is highlighting that the Czech Republic is the
first of the four new Central European members of the EU to
show a trade surplus. Economists project a 2006 trade
surplus of USD 2.5 to 3.2 billion, pointing out that
economies in the main trading partner nations in the eurozone
are gradually recovering and sales of Czech industrial
producers are growing. More conservative analysts anticipate
a trade surplus at least the first half of 2006, and say
further developments will depend on the Czech crown exchange
rate and the rate of economic recovery in the EU, the
destination for 84 percent of all Czech exports.


2. According to the Czech Statistical Office, the 2005
foreign trade balance ended with a surplus of USD 1.75
billion (CZK 42 billion),reflecting a 8.6 percent increase
in exports and 4.6 percent increase in imports. In 2004, the
trade balance was a deficit of over USD 1 billion (CZK 26
billion). Analysts remarked that the year-end trade surplus
shows the achievements of Czech industry and Czech exporters
that are successful on EU markets despite the fast
appreciating Czech currency and continuing weak consumer
demand in Germany, its number one export market.


3. BY INDUSTRY: Exports in machinery and transport equipment
was the biggest source of the trade surplus (USD 78 billion),
followed by manufactured goods. Skoda Auto and
Toyota-Peugeot-Citroen Automobile (TPCA) continue to lead
Czech exports. Trade deficit in chemicals and related
products decreased slightly, while exports in mineral fuels,
lubricants and related materials increased significantly (USD
1.7 billion).


4. BY COUNTRY: Compared to 2004, the trade surplus with the
EU member states increased by USD 2.4 billion while trade
deficit with non-EU states decreased by USD 500 million in

2005. Specifically, the trade balance improved with France,
the United States (by USD 67 million),Slovakia, and Germany.
The trade balance deteriorated with the Netherlands, Russia,
and China.


5. According to both the Czech Ministry of Industry and Trade
and the U.S. Department of Commerce statistics, the U.S. is
the Czech Republic's twelfth largest export market and the
eleventh largest source of imports, at a volume of
approximately USD 4 billion. The Czech Republic is the 62nd
largest export market for the U.S. and the 29th largest
source of imports. According to CzechInvest, foreign owned
companies are transforming the Czech economy by employing 37
percent of the workforce in industry and generating 60
percent of total Czech exports. With 2005 FDI inflows at a
record USD 10 billion (doubled from 2004),this trend is
likely to continue, supporting Czech exports and strong GDP
growth.
CABANISS