Main trends of Czech industry and foreign trade in 2015

4. 5. 2016 | Source: Ministry of Industry and Trade of The Czech Republic

motiv článku - Main trends of Czech industry and foreign trade in 2015 Development of the Industrial sector and Development of Foreign Trade in 2015, and expected development in 2016.

Industrial growth in 2015

Industry plays an increasingly pivotal role in the Czech economy, because it contributes the most to gross value added, around one-third, and manufacturing counts for more than a quarter. In 2015, Czech industry continued the growth that had been renewed in the previous year and production rose by 4.4% year-on-year (5.0% in 2014). In core manufacturing industries, production rose by 5.6%.

Production fell in other sectors, by 1.7% in mining and quarrying, where overall output was impacted by a steep fall in production during the first half of the year, as well as by 2.2% in the production and distribution of electricity, gas, steam and air conditioning, where the unplanned shutdown of the nuclear reactor at the Dukovany nuclear power plant in September was reflected in the negative results.

The extremely good results from the past two years have placed the Czech Republic in the group of countries which have already exceeded 2008 pre-crisis levels of industrial production. Its output is approximately double that of the eurozone countries and greatly exceeds the results of its most important trading partner - Germany.

Production in the manufacturing production increased in sixteen sectors in 2015, contributing 78.4% of total industrial sales. The major performer in the manufacturing sector was, traditionally, the production of motor vehicles, with a growth of 11.5% and contributing a share of 28.4% of total industrial sales, followed by other manufacturing industries (with a growth of 10.5%), manufacture of rubber and plastic products (9.8%) and manufacture of basic pharmaceutical products and pharmaceutical preparations (8.9%).

Expected industrial growth in 2016

The output from the industrial sector in 2015 was a major factor in the growth of the overall economy. These positive results were not only due to an increase in foreign orders, but also growing household consumption, reflecting the decline in unemployment, a growth in real wages and low inflation. Currently, the latest leading indicators (Purchasing Managers’ Index, business confidence in industry) do not indicate any fundamental turnaround and we can therefore expect this growth trend to continue in 2016.

However, together with a slowdown in GDP growth, we also expect a slight slowdown in industrial production in 2016, to roughly below the four percent margin.

Growth of foreign trade in goods in 2015

The Czech Republic’s foreign trade figures (according to data from border statistics) broke previous records in 2015 and continued to grow. Despite the high comparative base set in the previous year, turnover rose by 8.0% to 7,377.9 billion CZK. Although exports recorded a lower rate of growth (7.5%) than imports (8.6%), volumes for the whole year rose to 3,902.1 billion CZK, with imports at 3,475.8 billion CZK. This affected the trade balance, which showed a surplus of 426.3 billion CZK, which, compared to 2014 was 2.9 billion CZK lower year-on-year.

The fact that the largest volume of exports in the country’s history was achieved in 2015, confirms the strong competitiveness of Czech companies and their ability to maintain their position on foreign markets, particularly in the demanding European markets.

The relatively high rate of growth of exports was primarily due to the long-term favourable situation on the European car market, where the weaker Czech crown helped domestic producers maintain their competitiveness. The growth in foreign trade was also greatly helped by the global slump in the prices of energy commodities, which pushed their import prices down, thereby putting the brakes on the growth rate in imports and the impact of the weaker Czech crown. In addition to the exchange rate of the crown, imports were increasingly impacted by rising household consumption and industrial activity, which generated additional demand for imported goods.

Development in foreign trade in 2016

Foreign trade figures for the first two months of this year revealed no surprises as they followed on from the growth recorded in the previous year, both for imports and exports (using the cross-border concept). The impact of the artificial weakening of the Czech crown has not worn off and it still has a positive effect on Czech exports.

Together with the low prices of imported raw materials, which lower import prices, thereby reducing growth rates of imports, the positive figures are also due to the faster growth in exports than imports, resulting in a further increase in the trade balance, with a surplus even higher than a year ago. This has also occurred in a situation where high levels of household consumption and solid industrial activity, which generate demand for imports, have increased import volumes.

The situation on the European automotive markets continues to be favourable. Industrial companies continue to report increased foreign orders and this raises expectations that Czech exports will continue to grow this year. The German economy remains in good shape, which in turn results in increased demand for Czech exports. The possible risks for growth in foreign trade as a whole, particularly in terms of cooperation, are the slowing Chinese economy, as well as signs of weakening global economic growth, the risk of deflation in the EMU countries and the migration crisis.

Downloadable files:

Article tags

Related articles


+ New item