Czech Republic’s current account surplus likely to exceed 1 pct of GDP in 2016

The Czech Republic has recorded the smallest current account surplus so far in 2016 in May, around EUR 1 billion. This is mainly due to the outflow of dividends that reached around EUR 0.6 billion (CZK 17 billion). But this is not a considerable surprise as the firms in Czech Republic have registered record profits in recent years and foreign owners intend to gain from the above-average profitability of Czech firms.

However, the outflow has a positive side too. It eases the pressure on the Czech koruna’s appreciation and is, hence, positive news from the viewpoint of the nation’s central bank, noted KBC Market Research in a research report.

Current account’s other items mostly extended previous trends. Trade in goods and services in the country continued to stay positive, while EU funds also continued to flow into the nation in the month of May. Therefore, the overall trend continued to be the same, while current account is moving in towards record surplus surpassing 1 percent of GDP in 2016, according to KBC Market Research. Outflow of dividends remain the most considerable drag on even higher surplus, added KBC Research.