PRAGUE, Dec 8 (Reuters) - The Czech foreign trade balance
posted a 3.95 billion crown ($198.9 million) deficit in October
as exports dropped while analysts had expected a surplus, data
showed on Monday.
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KEY POINTS:
(in bln CZK) Oct Sept Oct fcast
balance -3.95 10.69 (10.88) 7.7
(nominal y/y change in pct)
exports -10.7 4.1 (5.1) n/a
imports -5.9 5.9 (6.8) n/a
(For full table of trade data, click on........[])
- According to seasonally-adjusted preliminary data, exports
fell 2.2 percent in October from September, while imports dipped
4.1 percent month-on-month.
- In euro terms, exports fell 1.5 percent and imports rose 3.7
percent year-on-year in October, beating the dynamics in crowns,
thanks to the firming of the domestic currency.
COMMENTARY:
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT
"Foreign trade is undoubtedly a sign that the economy is
weak. But the connection between a weak economy and a low
inflation is not that obvious so there is a question what the
Czech central bank will prioritise and how many signals such as
those we saw today will be needed for (the bank) to reassess its
outlook from October."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT:
"All the data released this morning are sending a clear
message: the Czech central bank has (a lot of) room for further
interest rate cuts. Not only that November inflation is 1.1
percentage points below the recent forecast of the central bank
(although very close to the market expectation) and the
unemployment rate failed to show its usual seasonal decline this
November as the labour market situation worsens.
"We see the major news in foreign trade statistics where
collapsing exports of machinery and transport equipment pushed
the overall trade balance into deficit. Performance of machinery
and transport equipment exports says that Czech economy is
heavily hit by recession in Western Europe and economic slowdown
in Emerging Markets economies and the picture will remain bleak
well into 1H 2009.
"Negative news for the Czech crown but obviously bullish for
the bond market. We expect the Czech National Bank to cut
interest rates by 50 basis points at their 12 December board
meeting."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Foreign trade did not end up positively. The Czech economy
is beginning to feel the impact of the euro zone slowdown.
Imports fell by 11 percent which is a drop that nobody expected.
So the impact is beginning to be very strong."
"It is also a reason to cut rates more aggressively and for
the government to work on a fiscal rescue package."
MARKET REACTION:
Crown initially weakens to 25.93 to the euro after the
inflation and trade data but returns to 25.785 by 0829 GMT, from
25.82 ahead of the figures.
BACKGROUND:
- Market expectations before release []
- Slovak September trade figures []
[] [] []
- For further details on October foreign trade and other past
data, Reuters 3000 Xtra users can click on the Czech Statistical
Bureau's website:
http://www.czso.cz/eng/csu.nsf/kalendar/2004-vzo
- For LIVE Czech economic data releases, click on <ECONCZ>
- Instant Views on other Czech data click on []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
(Reporting by Jana Mlcochova)
