The volume of Czech exports to Russia took a slide in 2015 as a result of the sanctions against Russia and the country’s own retaliatory measures. According to figures released by the Czech Trade and Industry Ministry Czech exports to Russia fell by 32.8 percent year-on- year to 45.2 billion crowns in the first seven months of this year. Due to a faster drop in Czech exports than imports, the deficit in trade with Russia increased by 7.5 billion to 18.5 billion crowns.
Czech engineering companies exporting to Russia have been the hardest hit by the negative trend. For instance the Brno-based engineering group Alta, registered a 2 billion crown drop in sales to 10.2 billion last year and a respective drop in profits. As a significantly pro-export oriented company that focuses mainly on the Russian market, it now has a big problem.
The group’s CEO says limitations in access to financial flows and the EU sanctions against Russia have caused a significant reduction of the market and a cut in Russian purchases of engineering products from EU member states.
Experts say other factors have also contributed to the decline – including the drop in oil and gas prices that led Russia to devalue the ruble. Due to the fall of the ruble Czech products have now lost competitiveness and many of these companies’ Russian trading partners now prefer to buy cheaper home-made products.
There is also a strong buy-Russian campaign aimed at encouraging companies in Russia to favour domestic products as a response to the sanctions. At the same time, there is competition from importers from third countries, in particular China, who are eager to fill the vacant space on the market vacated by firms who have been forced to withdraw due to the sanctions.
And finally the tourist industry has been affected as well. The Czech Republic has registered a significant drop in the number of visitors from Russia, a gap that has partly been filled by more tourists coming from Asia.
Industry and Trade Minister Jan Mládek said at the Brno Trade Fair that a revitalization of trade with Russia would take time and a turn for the better could not be expected before 2016. Meanwhile he said the government was doing its best to support Czech companies in establishing their presence on alternative markets in countries such as Azerbaijan and Kazakhstan.