Business News

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In this week’s business news: Czech GDP growth slows in the second quarter of 2011, the Prime Minister admits that raising the lower VAT rate to 19 percent in 2012 is a possibility, Student Agency’s RegioJet launches its ticket sales for the Prague-Ostrava route, Škoda Auto saw a sales growth of 18.3 percent in the first eight months of 2011 year-on-year, and the Czech Republic slips two notches in the WEF Global Competitiveness Report.

Czech GDP growth slows in second quarter of 2011

Foto: Štěpánka Budková
The Czech GDP grew by 2.2 percent in the second quarter of this year, falling about 0.2 percentage points short of a preliminary estimate for that period. GDP growth is down from 2.8 percent in the first quarter and 2.7 percent in the fourth quarter of last year. According to figures released by the Czech Statistical Office earlier this week, export remains a key factor in the country’s GDP. Analyst Markéta Šichtařová of Next Finance said that the Czech economy is slowing down much quicker than expected and that no economic growth at all in the future was a possibility. According to analyst Václav Franče of the Raiffeisen Bank, an overall GDP growth of 1.9 percent for 2011 is likely.

Prime Minister: Raising lower VAT rate to 19 percent 2012 a possibility

Prime Minister Petr Nečas said on Friday that the lower VAT rate could be raised to 19 percent as early as next year. This measure, which he says is one way to increase the budget revenue if GDP growth falls short of estimates, would not be applied to medicine and books. The prime minister added that another way to increase revenue would be to reduce the volume of free emissions allowances to between 65 and 75 percent. Taxes from gambling could also be a way to raise revenue; however, Mr. Nečas said that this would have to be done carefully. Imposing a tax of 20 percent on betting operators could drive them out of the country, he said.

RegioJet launches tickets sales for Prague-Ostrava route

RegioJet, the new railway operator of the travel services company Student Agency, launched its ticket sales on Wednesday. Traffic on the new RegioJet route between Prague and the Moravian-Silesian city of Havířov will be opened on September 26, with a total of three connections in each direction per day. The route connects two major Czech cities: Prague and Ostrava, and a price war for this connection between Czech Railways and its first competitor on this route has been predicted. In the future, Student Agency plans to expand the number of its daily connections from Prague to Havirov to eighteen. While Student Agency offers a one-way online ticket for 230 Czech crowns, Czech Railways charges a fare of 438 crowns at ticket counters. Student Agency, which successfully operates a number of bus lines both domestically and internationally, is planning to mirror the ticket sales strategy of its busses for its new RegioJets and propagate online sales over paper tickets.

Škoda Auto sees sales growth of 18.3 percent in first eight months year-on-year

Czech automobile producer Škoda Auto has improved its sales in the first eight months of 2011 by 18.3 percent year-on-year. The car manufacturer also reached a new record of vehicles sold in August: In 2011, Škoda sold 60,400 cars, as compared to 55,900 during the same month in 2010. A spokesman for the company said that Škoda is experiencing growth in all of its markets worldwide and that the car producer was on track to reach the objectives of its growth strategy. Domestically, the company’s market share grew by 5.3 percent in August, with 4,000 new vehicles sold. In China, Škoda achieved a growth of market shares by 20.2 percent, which amounts to some 18,800 new cars sold in the month of August. The most popular model is Škoda’s family car Octavia.

Czech Republic slips two notches in Global Competitiveness Report

According to the latest Global Competitiveness Report from the Swiss NGO World Economic Forum, the Czech Republic has slipped in the rankings by two notches to 38, down from 36 last year. The development was mirrored within most of countries in the region, with Slovakia down nine notches compared to last year and Poland dropping two places to 41. Hungary managed to improve its position by four places, up to 48 from 44 last year. Despite its lower rankings, the Czech Republic still stands as the most competitive of the four Visegrad countries. Topping the list are Switzerland, Singapore and Sweden.