INSTANT VIEW 4-Czech July trade shows CZK 12.25 bln surplus

                                
 PRAGUE, Sept 7 (Reuters) - The Czech foreign trade posted a
12.25 billion crown ($686.4 million) surplus in July, above
analyst forecasts in a Reuters poll, data showed on Monday.
                                
 Both imports and exports fell at a double-digit pace, like
in most of the year so far, but exports edged up month-on-month.
                                
 
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KEY POINTS:
(in bln CZK)           July         June          July fcast
 balance               12.25    19.47 (20.43)          9.0
(nominal y/y change in pct)
 exports              -17.9    -15.5 (-15.1)         -17.6
 imports              -21.3    -19.3 (-19.3)         -20.0

 (For full table of trade data, click on........[nPRA004739])

- According to seasonally-adjusted preliminary data, exports
rose 0.5 percent in July from June, while imports slipped 1.4
percent month-on-month.
- In euro terms, exports fell 25.1 percent and imports plunged
28.2 percent year-on-year in July.
- Exports of cars and machinery dropped by 20.1 percent
year-on-year. Imports in that sector fell 22.1 percent.

 COMMENTARY:
                                
 VOJTECH BENDA, SENIOR ECONOMIST, ING, PRAGUE
                                
 "That the balance is better than expected is mainly due to a
bigger impact of the drop in the negative balance in oil trade."
                                
 "The continuing decline in imports of investment goods...
signals that investments continue to decline and we can expect a
rather big drop in investment activity."
                                
 "Also a drop in imports of consumer goods start deepening...
so another signal that household consumption weakens."
                                
 "This shows household demand will likely be the main risk in
the nearest quarters."
                                
 
                                
 RADOMIR JAC, CHIEF ECONOMIST, GENERALI PPF ASSET MANAGEMENT
                                
 "In months to come we will see impact of two contradictory
factors: on one hand we have improving PMI in both Western
Europe and the Czech Republic, which should help exports and
also imports to reduce pace of their annual decline in the near
term."
                                
 "At the same time, however, we think that Czech industry
will inevitably feel negative impact of end of car scrapping
subsidies in Germany (the scheme ran out in early September)."
                                
 "To sum up: we see July data as slightly better than
expected but they of course still paint a picture of sharp
annual decline in economic activity. Still, we believe that the
worst is already over."
                                
 
  PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK, PRAGUE:
                                
 "The trend of the previous months continues. A steep decline
in imports exceed the also steep but still smaller drop in
exports. On the import side, the year-on-year drop in the oil
prices plays a big role in year-on-year comparison. Changes to
the worse for the traded balance should be in sight. Inventories
will begin to recover and the oil price will go gradually up.
Both will strengthen imports, while exports will be hit by the
exhaustion of the stimulating effect of the scrap subsidy
(abroad)."
                                
 
  PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
                                
 "I would interpret the data as neutral; they are more or
less in line with consensus regarding...year-on-year decline in
exports. Imports went down slightly more, which brought the
overall surplus slightly above consensus. But the difference is
not big."
                                
 "Going forward the year-on-year decline will moderate. We
will continue to see surpluses in individual months, and only in
the last quarter we can switch to a year-on-year growth in
exports because of the lower base."
                                
 
  DAVID MAREK, CHIEF ECONMIST, PATRIA FINANCE
                                
 "The reading is relatively positive and fits in the picture
that a gradual recovery of the economy is taking place."
                                
 "Exports increased from the previous month... but the data
shows domestic demand drop has deepened, which is indicated by a
decline in imports from last month."
                                
 
                                
 MARKET REACTION:
                                
 The Czech crown was little change after the data, trading at
25.475 <EURCZK=> to the euro.
                                
 
                                
 BACKGROUND:
- Market expectations before release              [ID:nL2480068]
- Slovak June trade figures                       [ID:nLB630051]
- Report on last Czech c.bank rate decision.......[ID:nL6146715]
                                
 [ID:nL655323] [ID:nPRG001524] [ID:nL6221606] [ID:nPRA004692]

- For further details on July 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

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 (Reporting by Jana Mlcochova)