Czech industrial production likely to have slowed in April

Czech industrial activity is expected to have decelerated in April. Lower investment activity has negatively impacted the country’s industrial production. However, it advances from rising demand for cars in the euro zone. The Czech industrial sector is continued to be mainly driven by car production. However, industrial production’s other sectors are not performing so well. Czech’s industry is expected to have grown just 2.3% y/y in April, said Societe Generale in a research report.

The country’s construction sector is performing even worse. Since EU co-financing has declined, public financing is weakening. Furthermore, building construction is suffering from a lack of available plots in the capital, noted Societe Generale. In April, construction sector continued to shrink. It had contracted 13% y/y.

Meanwhile, the country’s external trade is likely to record high surpluses. In 2016, Czech Republic is expected to print a record surplus, added Societe Generale. Given the constant growth recorded in Czech’s key trading partners, the country’s exporters are benefitting. Demand for cars, in particular, in the euro zone continues to be strong and underpins domestic producers.

“We expect the trade surplus to reach CZK19.6bn”, said Societe Generale.