Business News

Photo: Barbora Kmentová

In Business News this week: flood damages estimated between 10 and 20 billion; insurers to pay over 7.5 billion in flood compensation; government to offer tax breaks to inundated businesses; Czech economy in deep recession while household spending up; and car sales down by 13 percent between January and May.

Flood damages estimated between 10 and 20 billion

Photo: CTK
The Czech Republic has begun calculating the damages inflicted by massive flooding that hit the south, west and north of the country this week. First estimates suggest the overall costs of the flood could range between 10 and 20 billion crowns, or between 500,000 and one billion US dollars. The estimates are however only based on comparing the scope of this year’s flooding with that of 2002, which was much larger, and caused damages of more than 70 billion crowns.

Insurers to pay over 7.5 billion in flood compensation

Photo: CTK
Czech insurance companies, meanwhile, say that have registered some 96,000 insured events during the floods, with costs of around 7.5 billion crowns. The Czech Insurance Association said, however, that only minor events had been reported so far, which means the costs could be considerably bigger. A spokesman for the largest Czech insurer, Česká pojišťovna, said they had received first reports of damages in the industrial sector valued at around 100 million crowns. Some experts believe that insurance companies might raise the price of their policies as a result.

Government to offer tax breaks to inundated businesses

Photo: Barbora Kmentová
The Czech government has already released some five billion crowns for immediate assistance to flooded regions; another 3.3 billion have been earmarked for the reconstruction of damaged roads, railways and other infrastructure. Czech Finance Minister Miroslav Kalousek also said tax breaks and government-guaranteed loans would be made available to firms and businesses affected by flooding; details of the plan should be announced next week. For their part, the Czech Agriculture Ministry will offer assistance to agriculture firms which suffered losses in the floods. Some 50,000 hectares of agricultural land have been inundated.

Czech economy in deep recession while household spending up

Photo: archive of Radio Prague
The Czech economy’s output in the first quarter of this year fell by 1.1 percent compared to the previous three-month period, according to revised data released by the Czech Statistical Office. The revised figure is 0.3 percent lower than the previous one. Compared to the same period last year, the Czech Republic’s gross domestic product dropped by 2.2 percent. The economy fell for the sixth quarter in a row, the longest period in recent history. However, Czech household consumption rose by 1.6 percent in the first three months of this year compared to the previous quarter, which some economists say could be a turning point for the economy.

Car sales down by 13 percent between January and May

Photo: Klára Stejskalová
Car sales in the first five months of 2013 dropped by 13 percent compared to the same period last year, the Czech Car Importers Association said this week. More than 66,300 vehicles were sold, 62 percent of which were corporate purchases. Škoda registered a 17-percent decrease in sales but still topped the list of best selling cars, followed by Volkswagen and Hyundai. Analysts expect car sales to improve towards the end of the year, and believe that in 2014, the industry should be back in black numbers.