Market Analysis and Risk Management Czech Republic

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Market Analysis and Risk ManagementCzech
Republic

• Dr. Johann Diwoky
• Member of the Board
• Österreichische Kreditversicherung Coface AG

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Czech Republic A market on the doorstep...
299 km Wien - Prag
Wien,Bratislava
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Trade flows between Austria and the new
Accessing Members to the EU
Austrian exports to Accessing
Austrian imports from Accessing
Countries
Countries
(2003)
(2003)
Estonia
Slovenia
Poland
Lithuania
0,44
10,02
11,43
0,37
Estonia
Hungary
0,74
32,00
Latvia
0,22
Slovakia
Latvia
16,59
0,78
Lithuania
Czech Republik
1,14
Slovakia
30,65
11,97
Czech Republic
24,28
Poland
13,46
Hungary
30,27
Slovenia
15,62
12,66 of all Austrian exports
10,75 of all Austrian imports
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GDP per capita of the new member countries
compared to EU-15
120
Ø EU-15
Czech Republic
100
Hungary
80
Poland
60
40
Slovenia
20
Slovakia
0
1998
1999
2000
2001
2002
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Growth outlook for CEE

• GDP, y-o-y changes ()
• 2003 2004 2005
• Austria 0.7 1.5 2.3
• Germany 0.0 1.6 1.8
• Czech Rep. 3.1 3.4 3.6
• Hungary 2.8 2.8 3.6
• Slovakia 4.0 4.6 5.1
• Slovenia 2.3 3.3 3.4
• Poland 3.5 4.5 4.6
• EU-15 0.8 2.0 2.4
• Source Emerging Europe Market Review
• Source The Economist Group
• Source WIFO, OECD, European Commission,
  Statistik Austria

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Coface Country _at_rating
January
January
January
January
March 2004
2001
2002
2003
2004
A1
Austria
A1
A1
A1
A1
A2
Germany
A1
A1
A2
A2
A3
A3
A3
A2
Czech Republic
A2
A2
A2
A2
A2
Hungary
A2
A2
A2
A2
A2
Slovenia
A2
A3
A3
Slovakia
B
B
A4
A4
Poland
A4
î
A4
î
A4
î
A4
B
B
Bulgaria
B
B
B
C
B
Romania
B
B
B
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Coface Country _at_rating - Definition

• Investment Grade A2Default probability is
  still weak even in the case when one country's
  political and economic environment or the payment
  record of companies is not as good as in A1-rated
  countries.

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Payment Incident Index
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Risk of payment default in the Czech Republic

• Payment behaviour in the Czech Republic
• Average credit period 14 to 45 days
• Average payment default 30 to 90 days
• Effective payment period approx. 90 days
• Payment default rate 70 - 80
• Payment is generally made faster if it concerns
  an international supplier.
• Payment default the most difficult sectors
• Wholesale (vegetables and fruits)
• Construction
• Forwarding Industry

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Successful debt recovery vs. age of the debt
Risk of payment default
93
Successfuldebt recovery ()
57
26
10
1
6
12
24
Age of the debt (months)

Source Coface Intercredit
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Insolvency trends 2002-2003
Source Coface Intercredit
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Corruption Transparency International
Corruption Perception Index (CPI)
0 much corruption 10 no corruption
Source Transparence International Czech
Republic http//www.transparency.cz/pdf/news_20031
0_en.pdf
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Foreign direct investments 1993-2003
Source Czech National Bank, March 2004
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Investors in the Czech Republic
Source Czech National Bank, March 2004
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Investors in the Czech Republic Samples
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Conclusion and prospects

• In 2003 the Czech Republic posted moderate
  economic growth fuelled by dynamic private
  consumption.
• The slight weakening of the koruna, low interest
  rates and progressive recovery of foreign demand
  should somewhat bolster growth in 2004.
• High foreign direct investment inflows will
  permit financing the current account deficit and
  limiting recourse to foreign debt.
• The government has announced a tax reform which
  should help to reduce the budget deficit.

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Contribution of Group Coface to the success of
exporters

• At the moment (March 2004) the various entities
  of Group Coface provide credit limits of EUR
  985,161.000 to exporters all over the world for
  their activities in the Czech Republic.