Macroeconomic Forecast Czech Republic

The Czech current account continued to report a surplus in November, with the monthly total standing at EUR424mn, to bring the year-to-date figure to EUR3.14bn. Exports totalled EUR82.1bn during January-November and increased by 18.0%, while the import bill came in at EUR79.0bn and lagged behind with growth of 16.1% y-o-y during the same period. Going forward, we expect the trade surplus to continue expanding in nominal terms. Our 2008 forecast stands at EUR4.9bn, increasing to EUR12.4bn by the end of our five-year forecast period in 2012. This will occur on the back of an increasingly competitive and expanding export sector, and robust external demand from the eurozone. One of the main risks to our forecast stems from the projected slowdown in eurozone economic growth, which would hamper external demand for Czech exports. Should eurozone grow slow further than expected, there may be a significant deterioration in export demand.

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