Czech current account swings back to surplus in May 2014, market expected deficit

By bne IntelliNews July 14, 2014

The Czech current account swung back into a surplus of CZK 9bn (EUR 328mn) in May 2014 from a deficit of CZK 11.4bn the month before, data from the central bank showed. The improvement reflects surpluses on the balance of goods and services and current transfers and a narrower gap on the income account. The reading contrasted with market expectations for a deficit of CZK 9bn.

The trade surplus shrank by 15.4% m/m to CZK 20.2bn and the surplus in the services account narrowed by 7.1% m/m to CZK 5.5bn in May. The income balance ran a deficit of CZK 22.9bn in May, much smaller than the CZK 51.1bn gap in the previous month. Dividends totalling CZK 13bn were paid in May, the central bank said. The balance of current transfers included a surplus of CZK 8.3bn on transfers from the EU budget to the Czech Republic.

On an annual basis, the Czech current account also improved as in May 2013 it posted a deficit of CZK 11.7bn. The 12-month rolling surplus stood at CZK 8.2bn, equalling to 0.2% of the full-year GDP forecast, according to IntelliNews calculations.

According to the finance ministry’s April macroeconomic forecast, the current account deficit should narrow to 0.4% of GDP in 2014 from 1.4% the year before.

Balance of Payments (CZK mn)              
  Jan/14 Feb/14 March/14 April/14 May/14 Jan-May/14 May/13
I Current Account 26 010 22 599 23 660 -11 424 8 960 69 805 -11 746
A. Trade balance 20 828 20 166 31 194 23 882 20 213 116 282 19 748
B. Balance of services 6 531 7 011 6 531 5 869 5 454 31 397 3 989
C. Income balance -5 761 -7 217 -11 991 -51 074 -22 861 -98 904 -30 688
D. Current transfers 4 413 2 639 -2 074 9 898 6 153 21 029 -4 796
II Capital Account 38 91 21 232 24 14 21 399 51
III Financial Account -17 385 -21 242 -27 194 26 373 10 968 -28 479 21 472
Source: Czech central bank              
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