Business News

Unemployment rate in regions, chart: CTK

Some of the stories we follow in this weeks economics report include: Czech unemployment reaches record high. Consumers prices fall in January, Czech Republic experiences deflation for first time in history. Czech Republic's economic level to reach 59 percent of European Union average this year. LNM group purchases Czech Republic's largest steelmaker. Czech Airlines rases passenger numbers to a record 3 million. Sales of notebook computers up 23 percent 2002. Engineering firm Vitkovice launches 60 million Czech crown contract with Chinese firm.

Czech unemployment reaches record high

Unemployment rate in regions, chart: CTK
The Czech unemployment rate reached an all time high of 10.2 percent in January. The labour ministry said over 500,000 were looking for jobs last month. The highest unemployment rate remains in the former heavy industry and coal mining regions of north Bohemia and north Moravia - close to 20 percent - whereas the lowest rate was in Prague and central Bohemia -around 4 percent. According to economic experts the two digit unemployment figure reflects the ripple effect of weak exports and a slowing economy in neighbouring Germany, the Czech Republic's largest trading partner. Some attribute it to an over-generous social welfare system.

You don't have to look far for examples, the Czech truck producer Tatra has announced that it will layoff 1600 of its 5200 employees by the end of this year. This is the latest in a series of layoffs, last year the company released 2600 employees. Currently the workforce is far cry from what it once was, 16,000 in 1990. After suffering a loss of 300 million crowns in 2002, the company plans to make a profit this year and sell 2000 trucks.

Consumers prices fall in January, Czech Republic experiences deflationfor first time in history

The Czech Statistics Office (CSU) announced that consumer prices fell by 0.4 percent year-on-year and rose by 0.6 percent month-on-month in January. The year-on-year drop in the consumer price index was the first in Czech history. The Czech central bank (CNB) said it had foreseen a slowdown in monthly inflation in January which had brought year-on-year deflation, and that it expected prices to begin rising again in the second quarter. The CNB is predicting a renewed growth of prices year on year in the second quarter of the year and the January year on year drop is in line with its latest macroeconomic prognosis.

Czech Republic's economic level to reach 59 percent of European Union average this year

The economic level of the Czech Republic will reach 59 percent of the European Union average this year. Out of the former communists states of Central Europe Slovenia is the highest with an expected level of economic activity at 73 percent. The Finance Ministry said that it would take decades for the Czech Republic to reach the EU average. The situation in Hungary, Poland, and Slovakia is even worse than in the Czech Republic, where economic activity stands at 55, 51, and 45 percent respectively. The Czech Republic is expected to reach 70 percent of the EU average by 2005. These developments are conditional on the Czech Republic's keeping its 1.2-1.8 point quicker growth in comparison with the EU, which the country should fulfill this year. The ministry puts this year's GDP growth at 3.3 pct, while the EU economy should grow by 1.5-2.0 pct.

LNM group purchases Czech Republic's largest steelmaker

International steel conglomerate LNM Group purchased the Czech Republic's largest steel producer Nova Hut adding steam to the country's industrial restructuring process. In a deal worth 180 million Czech crowns, or 6 million US dollars, LNM paid the National Property Fund (FNM) for a 52 percent stake in the company. Although the selling prices was quite low, LNM has promised a further 249 million US dollars in investment and 464 million US dollars for assumption for debt and trade liabilities.

Czech Airlines rases passenger numbers to a record 3 million

Czech Airlines (CSA) raised its passenger numbers to a record 3.06 million in 2002 and would end the year in profit, becoming one of the few airlines in the world to post a profit. The national carrier say a 6.5 percent increase in passengers while cargo shipments increased by just over 10 percent from the previous year. Despite posting a profit the airline said it had suffered a 300 million crown or $10 million US dollar loss in revenue after August's floods.

Sales of notebook computers up 23 percent 2002

Over 75,000 notebooks were sold in the Czech Republic last year, up 23 percent from 2001, according to a poll released by Hospodarske noviny. The biggest growth in sales was seen by firms whose clients are smaller and medium-sized companies and households. Despite these results, the Czech Republic lags behind the average in Central and Eastern Europe, where the growth rate of the notebooks market has reached nearly 30 percent. The firm Acer was the number one notebook seller on the Czech market with a market share higher than 36 percent.

Engineering firm Vitkovice launches 60 million Czech crown contract with Chinese firm

Engineering firm Vitkovice launched the production of material to be used in rolling mill equipment to go to China's First Heavy Industries Co. Vitkovice is trying to penetrate eastern markets to a greater extent in order to offset the decline in demand on the European market. Vitkovice's exports to China include mainly crankshafts and steel frames. In 2001, the firm sold 28 crankshafts worth 195 million Czech crowns - or 6.5 million US dollars in China. This year Vitkovice will set up a joint venture in China for the production of those shafts.

Some more stories in brief:

Czech furniture exporters have been doing well on the Canadian market lately, and furniture exports from the Czech Republic to Canada rose to 120 million Czech crowns in 2002 from 113 million crowns a year earlier.

Czechs spent a record-high 1.8 billion crowns or just over 60 million US dollars using Visa credit cards in December last year, mainly on food and drinks for Christmas and New Year's Eve. The sum was 93 percent higher then last December.

Aero Vodochody, the largest domestic producer of military aircraft, is holding talks in Poland on possible supplies of 25 to 40 sub-sonic L-159 planes, an aircraft it has already presented during the NATO summit in November 2002.

Shares of petrochemical holding company Unipetrol have added more than 10 percent this year, ranking among the biggest gainers on the Prague bourse (BCPP), and dealers ascribe the trend to another attempt of the cabinet to privatise the company and to speculations on a potential buyout.

The Czech National Bank (CNB) intervened on the domestic foreign exchange market in five of the 12 months of 2002, according to a report from the bank. The CNB bought foreign currencies worth just under 70 billion Czech crowns or 2.2 billion euros. Most of the intervention attempts took place in the summer, when the crown hit an all-time high against the euro.

Skodaexport wants to sign a contract within two months with the Indian company Karnataka Power Corporation on the construction of a new thermal power plant for 9 billion Czech crowns or 300 million US dollars, with the share of Czech supplies equalling 50 percent.