Business News

Photo: Štěpánka Budková

In Business News this week: The finance ministry has released a more pessimistic economic forecast for this and next year; Reconstruction of the D1 highway has resumed after two weeks of delays; The mortgage market grew rapidly in the past half year; The European Commission has approved 400 million euros for railway revitalization in the Czech Republic; Energy giant ČEZ set to launch a new virtual mobile network.

Finance ministry worsens GDP forecast

Photo: Štěpánka Budková
The finance ministry has released a gloomier outlook for this and next year. The ministry expects the GDP to drop by 1.5 percent this year and to grow by 0.8 percent next year. In its previous April forecast it predicted a stagnation of the GDP in 2013 and a growth of 1.2 percent next year. The more pessimistic prognosis from this week is based primarily on the decline of the economy in the first quarter, which the ministry says resulted from the decrease in investments, or gross fixed capital. Finance Minister Jan Fischer said the government aims to revive the economy by increasing investments, especially in the sphere of science and innovation as well as transport infrastructure.

D1 reconstruction resumed

Photo: CTK
One of the biggest road repair projects in the country’s modern history is back on track. The company in charge of the six-year renovation project of the Prague-Brno stretch of the D1 highway suspended construction work a few weeks ago, claiming that the condition of the road was much worse than was expected and asking to renegotiate the price of the contract with the Road and Motorway Directorate. Last week Transport Minister Zdeněk Žák made it clear that if work was not resumed immediately, he would void the contract worth some 24 billion crowns. Subsequently, work was resumed on Tuesday morning, even as the issue of extra costs is being assessed.

Czech mortgage market on the rise

Photo: Jiří Němec,  Radio Prague International
The volume of new mortgages taken out at Czech banks saw a year-on-year increase of almost 20 percent in the first half of this year. Clients took out more than 44,000 mortgages worth a total of around 71.8 billion crowns. The average mortgage interest rate for this year was 2.95 percent, which is the lowest rate in the past ten years. At the end of last year, the volume of the mortgage market in this country saw a growth of only 2.1 percent year-on-year.

EC approved more than 400 million euros in railway funding

Illustrative photo: European Commission
The European Commission has approved two major railway modernization projects for the Czech Republic, worth in total around 10.4 billion crowns, or 400 million euros. Around 262 million euros have been slated for the revitalization of approximately a 31-kilometer stretch between the Slovak border and the north Moravian town of Český Těšín on the Polish border. The railway corridor is part of a future trans-European transport network, which will eventually link Germany, the Czech Republic and Slovakia. Additionally, around 150 million euros will be given to modernize railway lines between the towns of Beroun and Zbiroh in Central Bohemia.

ČEZ to open a virtual mobile operator

Photo: Barbora Kmentová
The biggest Czech energy company ČEZ has announced that it will begin offering mobile phone services. ČEZ will be a virtual provider, operating in the network of Telefónica O2. So far, no virtual operators that have entered onto the Czech mobile communications market have been able to effectively compete with the largest providers - 02, T-Mobile and Vodafone. But ČEZ believes that using its portfolio of 3.5 million gas and electricity clients, it will be able to get a strong competitive edge. So far, the company says it is not planning to directly compete with their network owner Telefónica and will not be going after their client base.