Comments on the geographical orientation of external trade for October 2010

Press release

12/20/2010
8:00 AM

According to the Czech Statistical Office’s preliminary data, exports and imports increased 17.2% and 19.4%, respectively, in current prices in October on a year-on-year basis. The surplus on trade was CZK 1.1 billion lower year-on-year and amounted to CZK 15.3 billion.

Trade with the EU countries ended up in a surplus of CZK 58.2 billion, up by CZK 11.4 billion year-on-year. Deficit in trade with non-EU countries deepened by CZK 12.5 billion to CZK 42.9 billion. Surplus increased in trade with Germany, by CZK 5.4 billion, the UK, by CZK 1.9 billion, and Slovakia, by CZK 1.6 billion. The balance of trade improved from negative to positive with Poland, by CZK 1.8 billion. For October, deficits in trade with China, Korea and Russia deepened by CZK 9.4 billion, CZK 1.1 billion and CZK 0.7 billion. The positive balance decreased by CZK 1.0 billion in trade with the Netherlands.

In October, the steepest, specifically eightfold, increase in exports was registered in respect of Costa Rica, and a more than fourfold increase was recorded in trade with Indonesia. However, these countries account for only a negligible fraction of Czech exports. In respect of countries with more significant volumes of trade, exports to Russia went up appreciably in October; Russia now accounts for 2.6% of total Czech experts. From the perspective of the development of exports since the beginning of this year, the markets in Vietnam and Taiwan place first, their values having doubled.

On a year-on-year basis, deficit in trade with China deepened by CZK 58.3 billion over the first ten months of this year: exports from January to October were only CZK 18.6 billion. On the other hand, imports amounted to CZK 228 billion. A similar trend can also be felt by the EU as a whole. 

“The Chinese market is distant for Czech companies not only in terms of geography. A number of our clients are therefore protecting their peace of mind by documentary payments. In this respect, documentary letters of credit for imports play the leading role; for the Czech buyers, they ensure the required quality of the goods and their timely delivery. Further, documentary letters of credit helps them negotiate better pricing conditions or deferred payment. We mainly come across purchases of foodstuffs, textiles, panels for photovoltaic plants, parts of machines, household appliances and food packaging, and also disposable kitchen utensils. Most clients use the system of electronic communication with the bank called TF Online,” says Jaromír Chabr, Director Division Trade and Export Finance at Komerční banka, adding in respect of export financing: “Occasionally, we bought export debts with deferred maturity, at Chinese banks’ risk and without recourse to the exporter.”

Komerční banka also registered a steeper increase in payments from Chinese importers than in payments for Chinese exports to the Czech Republic in respect of non-documentary payments this year. In comparison with 2009, the volume of incoming payments over January to November 2010 almost tripled from CZK 399 million to CZK 1,094 million. Payments for locks and central locking systems account for more than one half of this volume. Outgoing payments for January to November 2010 increased by 100% compared with 2009, from CZK 4,619 million to CZK 8,556 million. More than 40% of these payments are those for deals in photovoltaic and the development of photovoltaic power plants. Jana Švábenská, Executive Director for Operations at Komerční banka, comments on the payments with China: “The door is open for our clients at our sister bank SG China. In addition to SG China, which focuses on trade finance and has branches in the main business centres of the country, we also work, naturally, with the largest banks on the Chinese market. With one of them, Industrial and Commercial Bank of China, we have just agreed on mutual support for our clients in China and the Czech Republic.”

Komerční banka is one of the best run universal banks in Central Europe. It provides comprehensive services to clients in the areas of retail, corporate, and investment banking. The Komerční banka Group’s 8,624 employees serve 2.7 million clients, who can use an extensive network of 393 points of sale throughout the country. Komerční banka currently operates 675 ATMs and 996,000 of its clients use one of direct banking channels.

Komerční banka is part of the Société Générale Group, one of the largest banking groups in the euro zone (in terms of market capitalisation), whose 157,000 employees serve more than 32 million individual clients worldwide.