INSTANT VIEW 3-Czech May C/A gap CZK 11.7 bln

                                
 PRAGUE, July 14 (Reuters) - The Czech current account showed
an 11.72 billion crown ($631.1 million) deficit in May, much
worse than the 4.4 billion gap forecast by analysts, data showed
on Tuesday.
                                
 A major factor was the outflow of 22.9 billion crowns in
dividend payments from Czech subsidiaries to their foreign
parent firms, the central bank said. 
                                
 There was also a net outflow of investment abroad amounting
to 2.3 billion due to acquisitions abroad.
                                
 The 12-month rolling deficit grew to 103.3 billion crowns
($5.56 billion), or 2.8 percent of 2008 gross domestic product
(GDP), according to Reuters calculations.
****************************************************************
KEY POINTS:
(CZK billions)            May          April        May forecast
Current Account         -11.72         9.89          -4.4
Financial Account         4.84       -11.31          n/a
Net Direct Investment    -2.26        10.84          n/a

 (For full table, double click on [ID:nPRA002659])
                                
 
- The current account ran a deficit of 11.72 billion crowns in
May. This reflects a 28.76 billion crown deficit on the income
balance, almost a double from last month, which is a result of
dividend payments of 22.9 billion crowns and of estimated
reinvested earnings. 
- Capital inflow on the financial account was approximately 4.84
billion crowns under ECB methodology. The net outflow of direct
investment was 2.26 billion crowns due to acquisitions abroad. 
- The goods and services balance ran a surplus.
- The balance of current transfers swung to a 3.32 billion gap,
from a 4.97 billion surplus a month ago, and included a deficit
of 1.9 billion crowns caused by transfers from the Czech
Republic to the EU budget. 
- A surplus on the capital account halved from last month to
1.54 billion crowns, as a net total 0.2 billion crowns was drawn
from the EU budget. This account also includes income from the
sale of emissions permits.
- The annual current account deficit total has been decreasing.
- The inflow of portfolio investment more than tripled from last
month to 44.21 billion crowns and was affected by a foreign bond
issue.
- The annual net direct investment inflow total has been
decreasing slightly. 
- The annual net portfolio investment total shows an inflow of
funds.
- Other investment showed a deficit owing to a change in the
short-term international position of banks (a decrease in
short-term deposits on the liabilities side and an increase in
the volume of loans on the assets side).
- The CNB's international reserves (adjusted for valuation
changes) recorded a surplus of 3.0 billion crowns.
                                
 
                                
 COMMENT:
                                
 HELENA HORSKA, ECONOMIST, RAIFFEISENBANK
                                
 "After four months in positive territory, the balance in May
is negative. The financial account by far failed to cover the 12
billion deficit on the current account."
                                
 "Foreign direct investment balance brought a big
disappointment, which for the first time it showed a negative
balance since September."
                                
 "But an interest in Czech bonds more than tripled the
surplus in the balance of portfolio investment from April."
                                
 "It is still true that the development of the balance of
payments gives no reason for strengthening of the crown."
                                
 "In the short term, we bet on its weakening."

                                
 PETR DUFEK, ANALYST, CSOB BANK
"It turned out worse than we expected, mainly due to
dividends. We can see that from the start of the year the
dividend outflow is higher than last year and it is probable
that the current account will end up a bit better this year than
last year, mainly due to a better result of foreign trade."
                                
 "It is evident that cheaper crude oil and natural gas will
help foreign trade into a higher surplus. It is rather a price
issue. It is not about competitiveness or how to survive the
crisis."
                                
 
                                
 TOMAS VLK, ECONOMIST, PATRIA FINANCE
                                
 "The income balance played the biggest role. It was affected
by the big dividend outflow. The current transfers balance was
also negative... as payments to the EU budget prevailed."
                                
 "The goods and services balance was significantly active...
but we should mark the major drop in imports due to the decline
in domestic demand, which we could see in today's retail sales
data."
                                
 
                                
 JAN VEJMELEK, ECONOMIST, KOMERCNI BANKA
                                
 "Terrible number, much worse than we expected. We expected a
surplus."
                                
 "The biggest drop was on the income balance, where we have
been expecting some reduction in the deficit, while the deficit
has deepened significantly. It includes the money that are
transferred abroad, dividends."
                                
 "Overall the (Czech) current account in a regional
comparison is not a problem. We have a surplus in foreign trade,
which other countries in the region do not, and this is what
makes us different."
                                
 
  BACKGROUND:
- Analyst expectations before data release        [ID:nL2140738]
- Czech May foreign trade figures                 [ID:nL7460725]
- Polish April C/A                                [ID:nLH471706]
- Slovak April C/A gap                           [ID:nBSD000208]
- Hungary's Q1 C/A gap                            [ID:nLU713285]
- Report on last Czech c.bank rate decision.......[ID:nLP385085]
                                
               [ID:nPRG001501] [ID:nLP908804] [ID:nPRA002636]

LINKS:
- For further details on May of payments numbers and past data,
Reuters 3000 Xtra users can click on the Czech National Bank's
website:
                                
 http://www.cnb.cz/en/statistics/bop_stat/

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 (Reporting by Jana Mlcochova)