Business News


The procurement market sank by 100 billion in 2011; the production of passenger cars hits a record; farmers prepare for blockades; the Finance Ministry forecasts nearly three percent growth for 2015; the Central bank keeps interest rate at record low.

Procurement market sank by 100 billion in 2011

Photo: Barbora Kmentová
The value of the Czech public procurement market sank by almost 100 billion crowns last year, from 594 billion to 496 billion, due to the economic crisis and the government´s austerity measures. In a report on the situation in public procurement in the Czech Republic, the Regional Development Ministry points out that roughly 40% of the money between 2006 and 2011 was not used within the framework of the law on public procurement. Orders worth 435 billion were placed by the state, 40 less than in 2010. The value of public orders from sectors like production and distribution of electricity, gas, heat and water, plummeted from 119 billion in 2010 to 61 billion last year. The development of the market is essentially copying economic developments and the government´s fiscal measures. The ministry estimates that public procurements will develop in a similar way for the next few years.

Production of passenger cars hits record

Photo: archive of CRo 7 - Radio Prague
Production of passenger cars in the Czech Republic grew by almost 14% in the first quarter of this year to a record 349,026 units, the Automotive Industry Association said this week. Output grew in Skoda Auto and Hyundai Nosovice, while TPCA Kolin registered a moderate decrease. Skoda Auto raised production by 13% to more than 196,000 cars and Hyundai´s production jumped by 46% to over 83,000 cars. Skoda Auto kept its market share at over 56%, TPCA slipped five points to 20%, while Hyundai´s share grew from less than 19% to 24%. Motorcycle production was also up, with Jawa manufacturing 374 units, most of which were exported.

Farmers prepare blockades

Photo: Tomáš Adamec
Farmers are preparing a series of blockades of regional roads to protest the planned cancellation of support for green diesel and the excise duty on wine. The first protest will take place on May 23; later protests may come to Prague. During April, the largest non-government organisation of Czech farmers called on Prime Minister Petr Nečas to hold talks on maintaining tax relief on diesel, but Mr Nečas, they say, did not respond. Tractors, harvesters and other machines will be used for the blockades, which will not yet be taken to the motorways. Should green diesel be cancelled, the farmers say they will have to cut production as diesel is expensive. Cheaper food products, they say, will be imported from countries where excise duty is being returned in full, and unemployment in rural areas will grow.

Finance Ministry forecasts nearly three percent growth for 2015

Photo: Barbora Kmentová
The Finance Ministry has prepared an updated economic forecast to be submitted to the European Commission by the end of May. The Convergence Programme states that following this year’s slight economic growth the Czech economy should recover and reach 2.8% growth by 2015. The Convergence Programme is a basic document for a country’s acceptance of the single European currency and describes the government’s strategy for developing public finances for the coming years. GDP growth of 0.2% is expected for this year and 1.3% in the next.

Central bank keeps interest rate at record low

Czech National Bank,  photo: Štěpánka Budková
The board of the Czech National Bank has left interest rates unchanged at a record low of 0.75%. The key interest rate has been at the lowest ever level for two years. Most analysts believe the central bank will keep rates on hold for the rest of the year, since higher inflation is caused by factors on which the monetary policy has no influence, namely the VAT hike, excise duties and rising prices of fuels. Total inflation significantly above the bank’s February forecast is reportedly no cause for concern, as the factors behind its rise should be temporary.