Czech Republic industry grows modestly

After a very successful first quarter, Czech Republic's industrial output slowed down despite very favourable dynamics in car production in May. In June, car production eased, but the rest of the sector compensated. 

"As a result, a 0.3% mom pick-up in the industrial sector is expected. In the yoy comparison, a rise of 4.3% is anticipated. External demand helped as well and we expect export growth of 1.7% qoq. Yet, exports will be offset by growing imports due to strengthening domestic demand both for consumption and especially for investment", says Societe Generale.

The trade balance will therefore thus maintain its surplus above CZK 17bn. The biggest pressure to imports comes from growing investment. There is a large amount of EU funds which must be tapped by yearend and the funds are used to infrastructural project to a big extent. This helps construction output which should remain elevated until year-end. In June, construction output grew 8.5% yoy, according to SocGen estimates.