Macroeconomic Forecast Czech Republic

The Czech current account deficit came in at CZK12.5bn for January to October, down substantially from the CZK78.1bn shortfall recorded over the same period in 2008. An increase in the merchandise trade surplus has been the primary factor driving the narrowing of the deficit, with a sharp contraction in domestic demand leading to a sharper fall in imports than exports. With exports likely to pick up in 2010 as external markets undergo economic recoveries, we expect the trade deficit to narrow again. As a result, we expect the current account deficit to reach CZK74.8bn, equivalent to 2.0% of GDP.

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