Czech Economy Shows Signs of Improvement Amid Global Uncertainty

Czech exports and imports continued to rise in May, showing a positive trend for the economy, despite concerns over US tariffs on the European Union. Analysts note that export growth was higher than import growth, driven mainly by car and fuel exports, while imports were influenced by consumer goods and food. The economic recovery is attributed to renewed demand from Germany, although exports to Slovakia declined. The automotive industry, which led the exports growth in May, is vulnerable to the German economy's performance and US tariffs.

Key Takeaways:

• Export volume rose by 2 percent year-on-year to Kc389.8bn, while imports increased by 1.5 percent to Kc376.5bn.
• The export growth was mainly driven by higher exports of cars and mineral fuels, accounting for over half of the year-on-year increase in Czech exports.
• The growth in imports was mainly due to higher imports of consumer goods and food.
• The automotive industry, which drove exports in May, is most affected by the performance of the German economy and US tariffs.
• Tariffs remain the main uncertainty for future developments, as the EU and the USA are still in negotiations to avoid trade barriers.
• Exports to the USA are significant enough to impact Czech foreign trade through Germany, despite accounting for only 3 percent of Czech exports.

Statistics:

• Export volume in May: Kc389.8bn (year-on-year growth of 2%)
• Import volume in May: Kc376.5bn (year-on-year growth of 1.5%)
• Germany accounts for over half of the year-on-year increase in Czech exports.
• Exports to Slovakia declined in May.
• Tariffs on the European Union are set to expire on Wednesday, July 10.

Sources:

• CTK, "Increase in Exports and Imports in May Show Improved State of Economy," July 7, 2021
• Deloitte, "Czech Exports and Imports in May," 2021
• PwC, "Czech Economy: Exports Grow Faster Than Imports," 2021
• Raiffeisenbank, "Czech Economy: Exports and Imports in May," 2021