* WHAT: Czech trade, inflation, industrial output full report
* April foreign trade surplus to shrink
* For TABLE with complete forecasts, click on []
By Mirka Krufova and Jana Mlcochova
PRAGUE, June 3 (Reuters) - The Czech trade surplus was much
smaller in April than a month earlier after the fall in imports
slowed and the underlying picture signalled the worst is past
for the economy, a Reuters poll showed on Wednesday.
The median forecast in a poll of 16 analysts showed April
foreign trade will post a 9 billion crown ($480.2 million)
surplus, less than half of March's 23.4 billion.
"We think imports targeted for further manufacturing and
re-export will show less dramatic falls in the months to come,
as PMI surveys indicate industry in both Western Europe and the
Czech Republic had already seen the worst pace of decline in
output," said Radomir Jac, chief economist at Generali PPF Asset
Management.
The Czechs avoided major financial trouble in the crisis but
its real economy has been hit hard by the slump in demand from
the euro zone, the country's main trading partner.
Exports make up about 70 percent of Czech gross domestic
product, and are a key source of growth, as illustrated by a
23.2 percent plunge in industrial output in April.
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Poland, the region's biggest economy with a population
almost four times the Czech's 10.5 million, relies on stronger
domestic consumption rather than exports and has been better
sheltered, but officials still expect minimal growth this year.
"The overall dynamics of both exports and imports have been
falling massively both in nominal and real terms, (but) the
numbers coming from Europe show that perhaps some bottom has
been reached, so it should likely reflect in the dynamics," said
Miroslav Plojhar, EMEA economist at JP Morgan.
"For the economy it means that the second and third quarter
won't see such a steep drop as the first quarter and (we will
see) a gradual recovery."
The Czech economy shrank by a record 3.4 percent in the
first quarter, according to an official flash estimate. The
Czech central bank expects a contraction of 2.4 percent for the
whole of 2009 and a 1.4 percent growth next year.
MINISCULE PRICE GROWTH
Analysts in the poll predicted Czech May inflation at 1.4
percent, down from 1.8 percent in April.
"Annual inflation will fall further in next three months and
will attack the 1 percent level," Generali PPF's Jac said.
The Czech central bank has said inflation would fall close
to zero this year before gradually picking up to 1.7 percent in
the third quarter of 2010.
"As regards monetary policy, while the Czech central bank
sent out indications that the door for possibility of another
interest rate cut remains open if needed, we do not think that
consensus in the (central bank) board is set for another cut in
its late-June meeting," Jac said.
The bank has trimmed borrowing costs by a total 225 basis
points since August to a record low of 1.50 percent.
(Editing by Toby Chopra)
(prague.newsroom@thomsonreuters.com; Reuters Messaging:
jana.mlcochova.reuters.com@reuters.net; +420-224 190 479))
($1=18.74 Czech Crown)
