Budget passed for 2010 to mixed emotions
The big story on the economic front this week is the passing of the state budget for 2010, which emerged from Parliament on Wednesday after no small amount of wrangling. The sticking point was primarily wage cuts for state employees included in the original budget plan. Left-wing parties took up the cause of demonstrating policemen, firemen and teachers to push through last minute changes adding up to 12.1 billion crowns and putting the caretaker government in a precarious position. Prime Minister Jan Fischer made a budget deficit of 163-billion a precondition for his cabinet’s continuation, and the centre-right Civic Democratic Party has called into question whether the technocratic government still enjoys the support of all parties. Meanwhile, President Václav Klaus called the final budget version the failure of the Civic Democrats, who he said gave up the fight.
Economy continues recovery
The Czech economy is continuing its recovery from recession according to the latest figures from the Czech Statistical Office. Gross domestic product for the third quarter of 2009 went 0.8% in the right direction from the previous quarter, in line with expectations. The economy’s year-on-year decline amounted to 4.1%, an improvement on the same result for the second quarter of 2009. The improved performance was led by the financial, construction, trade and services sectors. According to most analysts, the Czech Republic has the worst of the recession behind it, but a full recovery will be long in the making.
Czech Coal to remain most expensive supplier
The brown coal mining company Czech Coal will remain the most expensive supplier of brown coal to dominant electricity producer ČEZ in 2010. Confirmation from ČEZ came despite a report in the weekly Euro magazine that supplies from Czech Coal are considerably overpriced and a change would save the electricity company hundreds of millions of crowns. ČEZ said on Wednesday that the price of coal supplies next year would decrease in accordance with contracts which link them to the wholesale price of electricity and inflation. It said Czech Coal would nonetheless remain the company’s highest-priced supplier.
Škoda slows Fabia production as scrap incentives end
Škoda Auto will be slowing down production on its Fabia line for the first three months of 2010, as the end of automobile scrap incentives elsewhere in the EU slows sales. The incentives gave a powerful boost to the company’s popular Fabia model throughout 2009. But now as they come to an end, particularly in Germany, Škoda is reducing its production to four days a week. Workers, it says, will be able to pick up extra shifts when sales pick up again. Škoda however did receive good news this week from the Club of Automotive Journalists. They gave the Czech Car of the Year award to the company’s new Yeti sports utility vehicle.
Brno tractor manufacturer Zetor reportedly up for sale
Meanwhile, the Brno tractor manufacturer Zetor is reportedly up for sale. According to the economic daily E15, its Slovak parent company HTC Holding is seeking a buyer after a year’s decline in tractor production. Zetor has nearly halved its production since last year, when it manufactured more than 6,500 machines, most of which the paper says have ended up in the warehouses of foreign branches with no one to buy them due to the economic crisis. Zetor, which sells tractors in 80 countries around the world, no doubt faces hard times, with a 32 million loss last year compared to a 240 million profit the year before. From January, the company’s 1,200-strong workforce will be reduced to 700.