Despite efforts to diversify, dependence on exports to EU growing

24-07-2015

The Czech Republic has an export-dependent economy with the bulk of exports going to EU member states. The recent economic crisis and sanctions against Russia led the Czech government to draft a diversification strategy in 2012 and place a strong emphasis on economic diplomacy. However figures just out show that, so far, it has produced scant results.

Photo: fishtik / freeimagesPhoto: fishtik / freeimages The Czech Republic has an export-dependent economy with the bulk of exports going to EU member states. The recent economic crisis and sanctions against Russia led the Czech government to draft a diversification strategy in 2012 and place a strong emphasis on economic diplomacy. However figures just out show that, so far, it has produced scant results.

According to data released by the Czech Statistics Office Czech exports to EU member states should reach 83 percent in 2015, as compared to 82 percent in 2014 and 81 percent in 2012. The trend is the exact opposite of what the government has been trying to achieve. The country’s long-term export strategy for 2012 -2020 identified 12 priority countries for exports, all of them outside the EU (Brazil, China, India, Iraq, Kazakhstan, Mexico, Russia, Serbia, Turkey, Ukraine, USA and Vietnam). Although tapping new business and trade opportunities on non-EU markets has become a high priority on the agenda of the government’s and president’s foreign trips and numerous bilateral contracts have been signed to that effect the diversification strategy has been slow to take effect.

The Association of Czech Exporters Otto Danek told the CTK news agency there are several reasons behind the growing share of exports to the EU. The central and northern EU states are faring economically well and demand for Czech goods has been growing. The Czech Republic’s biggest trade partner in the EU –Germany –bought seven percent more goods last year and its next-door neighbor Slovakia bought nearly 13 percent more.

Lukas Martin the head of the international relations department at the Confederation of Industry, also cited by the CTK news agency, points out that that there are obviously cultural reasons behind the country’s strong dependency on the EU market. He says that Czech exporters know the European market very well, they know how it works and what to expect from their business partners. They do not encounter cultural problems and the paperwork connected with exports of goods and services is relatively simple. So while there is demand for their goods in the EU they will prefer to do business in this part of the world rather than putting time and effort into establishing a business relationship in a new environment further afield.

In a recent interview for RP Industry and Trade Minister Jan Mladek said that the country’s growing dependence on the EU market is also caused by problems on other markets where Czech firms had established a presence –not just Ukraine and Russia - but countries such as Iraq, Syria, and Libya. However the government remains dedicated to meeting the diversification strategy goals and Minister Mladek says it would be naive to expect immediate results in what is clearly a lengthy process.

24-07-2015