Business News

The Czech Republic's state debt grew by almost 25 percent in 2003. Czech producer prices grew faster than expected in February. Czech central banker says interest rate hike not imminent. Czech retail sales surprisingly fell in January, the first negative figure since August 2002.

Business News

Czech state debt grows by a quarter in 2003

The Czech Republic's state debt rose to more than 493 billion crowns at the end of December 2003, from 477 billion at the end of September, the Finance Ministry said. Overall, the state debt grew by almost 25 percent in 2003. Some analysts say that such a sharp increase is a serious problem in a period when the GDP grew by 2.9 percent. They argue that deficit financing is acceptable only in a period of recession when the government could try to stimulate growth by higher spending and investment. For this year, economists predict both a further acceleration of economic growth and growth of the public debt.

Oil, food drive Czech Feb industry prices up

Photo: Radio Prague

Czech producer prices grew by a faster-than-expected 0.3 percent in February, up from 0.8 percent in January, driven mainly by chemicals, oil refining and food industries. The Czech Statistics Office said on Friday said that the result put the year-on-year growth of industrial producer prices at 1.5 percent down from January's 1.6 percent. Agricultural prices alone grew by more than 3 percent, which analysts predict will stimulate growth of consumer food prices.

Interest rate hike not in sight

Czech central bank Deputy Governor Oldrich Dedek signalled on Monday that there was no rush for an interest rate hike, given subdued inflation pressures. Dedek said in an interview for the BBC that despite a pick-up in price growth over the past months, inflation remained low when adjusted for the one-off impact of tax hikes this year. The central bank has kept its two-week repo rate at a record low of two percent for seven consecutive months, holding it on par with the euro zone's main rate after a long series of cuts. However, rebounding inflation and accelerating growth has led analysts to predict the bank will tighten policy later this year to keep price growth under control.

Retail sales affected by drop in car sales

Czech retail sales surprisingly fell by 1.4 percent year-on-year in January, the first negative figure since August 2002. The main reason was a drop in car sales. The Czech Statistics Office said that car sales decreased by almost 12 percent in the first month, the worst result in five years. The fall can be attributed to a tax change for businesses which prompted higher car sales before the end of last year. At the same time, consumers may also be waiting for the Czech car maker Skoda Auto to start production of a new model later this year.