The Czech Republic reported a trade deficit of 5.9 billion CZK in July, marking the country’s first negative trade balance this year. This deficit is a significant contrast to the 16.6 billion CZK surplus recorded in the same month the previous year. The last time the country registered a trade deficit was in December 2019. The preliminary figures were released by the Czech Statistical Office (CSU).

Key contributors to the trade deficit were a decrease in electricity trade and an increase in the trade gap for computers, electronic, and optical devices. Exports for July declined by 4% year-on-year (YoY) to 318.8 billion CZK, while imports fell by 8.4% YoY to 324.7 billion CZK. Interestingly, July had the same number of working days as the previous year. After seasonal adjustments on a month-to-month basis, exports decreased by 3.6%, and imports declined by 1.4%.

The deficit in the trade balance for July was primarily driven by a significant drop in electricity trade, decreasing by 6.8 billion CZK. Additionally, the trade balance gap for computers, electronic, and optical devices increased by 6.5 billion CZK, while the deficit in the trade balance for electrical equipment rose by 1.8 billion CZK.

However, there were some positive factors in the trade balance. The deficit in the oil and natural gas trade balance decreased by 23.3 billion CZK YoY, largely attributed to declining commodity prices on global markets. The trade balance surplus for motor vehicles increased by 4 billion CZK, and the deficit in the trade balance for basic metals decreased by 3.1 billion CZK.

Despite the July trade deficit, the Czech Republic maintained an overall surplus of 73.6 billion CZK in the first seven months of this year. This stands in stark contrast to the same period last year when the country reported a deficit of 108.3 billion CZK. Year-to-date, exports have increased by 4%, while imports have decreased by 3.1%.

The trade deficit in July is a cause for concern, primarily due to the COVID-19 pandemic’s impact on the global economy. The government and Czech businesses will need to closely monitor the situation and implement measures to support the country’s trade sector in the coming months to address this challenge.

Article by Prague Forum