By Jan Lopatka
PRAGUE, Feb 5 (Reuters) - Czech foreign trade ended 2007
with a record-high surplus, propelling the crown currency to
fresh all-time highs, but analysts said an economic slowdown in
Europe could hurt this year's exports.
The Czech Statistical Bureau said on Tuesday that in
December alone the country recorded a trade deficit of 1.07
billion crowns, the smallest gap on record for the Christmas
month when there is traditionally a surge in consumer goods
imports.
For the full year, the country showed a surplus of 86.09
billion crowns, more than double the 39.76 billion figure in
2006, driven by booming manufacturing industries such as cars
and electronics.
"The full-year result is the highest in history, and
reflects past investments into production and export capacity in
combination with the peak of the economic cycle in the euro zone
and the fast pace of the Slovak economy," said David Marek,
chief economist at Patria Finance.
Foreign trade is a closely followed indicator with a strong
correlation with growth in the highly open central European
economy.
The market had expected a 1.2 billion crown monthly deficit,
according to a Reuters poll.
The crown strengthened as far as 25.57 to the euro <EURCZK=>
after the data from 25.65 earlier in the morning, improving on
the previous record of 25.63 scaled on Monday.
The currency has gained 8.9 percent over the past year, but
analysts said exporters appeared to deal well with the pressure
that the crown puts on profit margins.
They however disagreed on the outlook for 2008. Some said
the slowdown in Europe would slash the surplus, but others
predicted slowing household consumption in response to fiscal
reforms would slow import demand to compensate.
The cooling of household demand is expected to dampen Czech
gross domestic product growth to about 5 percent this year from
rates above 6 percent over the past three years.
"Apart from the currently strong crown, Czech exporters will
be negatively affected this year by the slowdown of our main
trade partners' economies," said Raiffeisenbank analyst Michal
Brozka who forecasts a 70 billion crown surplus this year.
"Also domestic conditions such as the tightening labour
market, which has led to wage pressure and higher interest rates
(will have an impact)," he said.
Komercni Banka forecast the surplus to grow to 114 billion
on the back of lower world commodity prices and strong trade
results in the latest months. A Reuters poll of analysts last
week gave a full-year 2008 surplus forecast of 84.2 billion.
Foreign trade was the last piece of data ahead of Thursday's
central bank meeting where policymakers are almost unanimously
expected to raise the key two-week repo rate by 25 basis points
to 3.75 percent to rein in resurgent inflation.
For a TABLE with trade figures, click on....[]
For an INSTANT VIEW, click on...............[]
(Editing by Ruth Pitchford)
