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Exporters Forecast Drop In Business

Czech Industry and Trade Ministry, CzechTrade

Mlade Buky, East Bohemia, April 26 (CTK) – Last year’s record Kc4,200bn exports of goods from the Czech Republic will not be repeated this year, exports could reach the level of Kc4,000bn at most, Exporters Association chairman Jiri Grund told CTK at the Export Forum today.


The reasons for the drop in exports are the firming crown, lack of employees and a drastic wage growth which lowers the competitiveness of Czech exporters, he added.


“Czech exports have already reached their limit. There will be no new record,” Grund declared.


According to statisticians’ data, Czech exports did grow moderately in January but the growth dynamics got slower.


“The foreign trade balance sank by over 20 percent at the beginning of the year. The main reason is that the import dynamics are 2.8 times faster than export dynamics. This was not the case in the past years, it is not good for Czech exports,” Grund said.


The association’s deputy chairman Otto Danek pointed at the fact that the Czech economy still depends mainly on exports to Germany and car exports.


“We see high risks in these two directions. Cross-border exports of passenger cars decreased by 7.4 percent year on year and exports of spare parts for the automotive industry by 3.2 percent. And exports to Germany are growing by just 1 percent in a yr/yr comparison,” Danek said.


Around one third of Czech exports target Germany.


Companies now lack around 300,000 employees, Grund remarked. “We have export orders and cannot implement them because there is no one to work on them,” he added.


Exporters in this connection complain about the reintroduction of payments of sickness benefits for the first three days of an illness, considered by the government.


“This is a wrong timing. Before the introduction of the measure that people do not get sickness benefits for the first three days of an illness, the average sickness absence rate in industry was 12 to 14 percent, while after its introduction the rate dropped immediately to 3 to 4 percent,” Grund said.


Exporters fear that when the payments for the first three days of an illness are reintroduced, sickness absences will grow, which will raise the lack of employees from one day to another.


Grund expressed concerns that the situation will in the end turn around and instead of a boom, crisis and layoffs will arrive.


“Due to the stronger crown, we are getting less money for more exports and have to pay higher wages. Costs grow and a moment will come when costs will be higher than revenues and production will become unprofitable,” Grund warned.


According to the Czech Statistical Office (CSU) latest data, Czech foreign trade surplus fell by Kc2.9bn yr/yr to Kc18bn in February.


Exports dropped by 1.2 percent to Kc279.6bn and imports decreased by 0.2 percent to Kc261.5bn. In particular trade in cars had an unfavourable impact on the trade balance, the statisticians said.