INSTANT VIEW 4-Czech May trade shows surplus,imports plunge

                                
 PRAGUE, July 7 (Reuters) - The Czech foreign trade posted an
11.71 billion crown ($629.7 million) surplus in May, marginally
above analysts' forecasts in a Reuters poll, data showed on
Tuesday.
                                
 The data showed a continued decline in both imports and
exports as the economy suffered from a slump in orders from
Germany and other key west European markets.
                                
 The economy shrunk by 3.4 percent in the first quarter and
economists expect an around 2.5-3 percent decline for the full
year.
                                
 In Hungary, central Europe's most crisis-hit economy, the
statistics office reported a 22.1 percent decline in industrial
output in May, an improvement from 27.1 percent slump in April.
[ID:nL7687288].
**************************************************************
KEY POINTS:
(in bln CZK)           May          April          May fcast
 balance               11.71        11.95            11.5
(nominal y/y change in pct)
 exports              -21.2        -22.8              n/a
 imports              -23.2        -26.0              n/a

 (For full table of trade data, click on........[nPRA002649])

- According to seasonally-adjusted preliminary data, exports
dipped 2.9 percent in May from April, while imports slipped 1.0
percent month-on-month.
- In euro terms, exports fell 26.0 percent and imports plunged
27.9 percent year-on-year in May.
- The monthly balance was helped by a 7.3 billion crown decline
in the deficit in mineral fuels trade from a year ago. The
surplus in the trade with vehicles and machinery dropped by 7.5
billion.
                                
 
 COMMENTARY:
                                
 NEIL SHEARING, ECONOMIST, CAPITAL ECONOMICS
                                
 "It's essentially a continuation of the same theme. Exports
have collapsed and imports have collapsed at a faster pace,
which is down to weaker a combination of weaker capital inflows
and that a lot of imports are imported for reexport."
                                
 "In short the external sector is only really going to be an
engine for growth once Germany recovers. And that's doesn't look
to be on the cards anytime soon. Probably not until the first
quarter of next year, and when it happens it's going to be
fairly weak."
                                
 "Our forecast for the Czech Republic is that it is going to
be fairly weak from the first quarter onwards."
                                
 
                                
 JAN VEJMELEK, HEAD OF ECONOMIC AND STRATEGY RESEARCH
KOMERCNI BANKA
                                
 "The (year on year) improvement is surely not due to an
improvement in export activity of the Czech economy. The
opposite is true."
                                
 "The statistics confirms the fact that the Czech economy
finds itself in a recession and thus imports for both production
and household consumption fall."
                                
 
                                
 RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
                                
 "It is in line with expectations, unfortunately. Dynamics of
both exprots and imports fell.. Unfortunately it is something
that was already indicated by the industrial output data. It is
of course a negative picture. The balance improves but what is
important for the Czech Republic is the dynamics of exports and
imports and both falls significantly."
                                
 "The economy continues to be in a recession even in the
second quarter and the industrial as well as the foreign trade
data both indicate that the second quarter GDP could contract by
some tenth of a percentage point faster than in the first
quarter."
                                
 "For the crown it is mixed news."
                                
 
                                
 MICHAL BROZKA, ANALYST, RAIFFEISENBANK:
                                
 "The story of the trade balance did not change in May --
exports are weak, but imports are even weaker. 
                                
 "The high correlation of exports with imports is maintaining
a favourable external balance, but the economy's performance is
going down.
                                
 "The result should not have an impact on the crown. For (the
crown) the development of risk aversion, whose growth in the
past days halted it and has the potential to further weaken it, 
should remain more important."
                                
 
 MARKET REACTION:
                                
 The crown <EURCZK=> dipped to 25.945 per euro versus 25.915
before the data release.
                                
 
                                
 BACKGROUND:
- Market expectations before release               [ID:nL2140738
- Slovak April trade figures                      [ID:nLB530248]
- Report on last Czech c.bank rate decision.......[ID:nLP385085]
                                
               [ID:nPRG001501] [ID:nLP908804] [ID:nPRA002636]

- For further details on May 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>
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 (Reporting by Jana Mlcochova, editing by Jan Lopatka)