The Czech trade balance scored the highest ever monthly deficit of CZK 24 bil. (USD 630 mil.) in December 2000, in line with our forecasts of a 22 bil. deficit. For year 2000 the deficit stands at CZK 127 bil. (7% of GDP), which is almost twice the CZK 64 bil. level in 1999. While imports grew by 19% in December, export growth decelerated to 14% from 28% in November and 36% in October. For the whole year imports grew by 28% while exports by 23% only.
While the vast December deficit was expected, it did confirm growing imbalance of the Czech economy where demand outstrips supply. The great trade deficit pushes the current account deficit below the safe limit of -4% of GDP (Patria expects the current account deficit of 4.5% of GDP in 2000). It remains to be seen how the central bank will interpret the number. However, as we predict the inflation rate to remain well inside the CNB target for the whole 2001, we do not expect the central bank to raise interest rates any time soon.
Two prominent Czechs arrested in Cuba and being held for meeting anti-Castro dissidents will spend at least 60 days in prison and possibly as long as six months. Cuban prosecutor had informed officials he would carry out an investigation of parliamentarian and ex-finance minister Ivan Pilip and former student leader Jan Bubenik, currently held in detention.
The Czech government agreed on Monday to open a tender for an adviser on a planned selloff of its 63 percent stake in the country's largest chemicals group Unipetrol.
The Czech koruna moved in a broad range between 35.26 and 35.14 to the euro before ending the day slightly above the morning's levels despite worse-than-expected December trade deficit figures. Late on Monday the koruna was trading at 35.20/24 to the euro from the morning's 35.21/24 and 35.30 late on Friday. The koruna/dollar stood at 37.63/66 from 37.85/88 in the morning and 37.70 late Friday.
The longest state 6.40/10 down 30 bps to 96.40/70, yielding 6.95/91 percent. The state 6.75/05 at 101.15/45 yielding 6.42/33 percent.
(David Marek)