Czech current account shows Kc24.8bn surplus in Q1--CNB

Current account ended Q4 last year in Kc58.176bn deficit, and full-year gap reached Kc113.858bn.

The net inflow of direct investment to the Czech Republic reached Kc17.6bn in Q1. Foreign investment in the Czech Republic stood at Kc36bn, of which 80 percent was attributable to expected reinvested earnings and the remaining part was channelled into equity capital increases of domestic corporations.

The strengthening of equity capital of subsidiaries was channelled mainly into financial intermediation, real estate and business services and manufacture of plastic and rubber products. Investment came mainly from the parent companies in Austria, Sweden and Germany, the CNB said.

Direct investment by domestic corporations abroad amounted to Kc18.4bn. A significant part was attributable to the share of domestic investors in reinvested earnings (Kc8.7bn) and the loans provided to foreign subsidiaries (Kc6.2bn). Investment in equity capital amounting to Kc3.6bn went mainly into electricity, gas and water supply.

The trade balance showed a surplus of Kc42.8bn, which is a year-on-year stagnation at current prices.

The balance of services ended Q1 in a surplus of Kc15.5bn and fell by Kc6.8bn year on year. A decline in the surplus was attributable to a fall of Kc2.7bn in the net receipts from foreign travel due to the lower number of visitors to the Czech Republic, the lower exports of transport services particularly in road and railway transport of goods (surplus declined by Kc2.4bn year on year) and the other services deficit.

Other services reflected a more striking year-on-year decline in receipts compared to expenditure (deterioration of Kc1.7bn). The lower foreign demand was registered particularly for telecommunication services, computer services, financial services, and was reflected in a decrease in the surplus on merchanting.

The income balance ended Q1 in a deficit of Kc39.4bn, which widened by Kc3.4bn year on year. On the debit side, there was an increase in the dividends paid on direct investment and higher returns from portfolio investment paid abroad. By contrast, the wage costs of foreign workers in the Czech Republic and payments of interest on other liabilities declined.

The capital account showed a surplus of Kc15.6bn in Q1 due to a surplus on transfers vis-a-vis the EU budget and revenues from emission allowance trading and trading in licence rights.

The CNB's international reserves (adjusted for valuation changes) rose by Kc36.2bn in Q1. This is due to the surplus on transactions executed for CNB clients and returns on investment.