Business News

Photo: CTK

In Business News this week, more gloomy macro-economic figures and predictions of job losses; the Ministry of Finance’s menu for recovery; a powerful silver lining for ČEZ; good and bad news for the richest Czech; and proof that the economy really is in a hole.

GDP growth figure for 2008 confirms downturn

A raft of statistics this week has helped sink a lot of the remaining optimism about the Czech economy’s prospects. The most telling one was the downward revision of last year’s economic growth to 3.1 percent from an earlier 3.5 percent, by the Czech Statistical Office. That means growth nearly halved in 2008 from 2007’s 6.0 percent. Most of the damage came in the last quarter, when growth fell by 0.9 percent compared with the previous three months.

Minister of Labour says unemployment rate could hit 10 percent

Photo: CTK
If that was not enough, Minister for Labour and Social Affairs Petr Nečas has come up with a gloomy forecast for jobs – or rather the lack of them. He predicted the jobless total will probably hit 8.0 percent and could even reach 10 percent according to one scenario being worked on by the ministry. The unemployment rate already jumped to 7.4 percent in February from January’s 6.8 percent according to figures released this week.

Ministry of Finance pushes through a la carte VAT formula

Miroslav Kalousek
The Czech economy could eat and drink its way its way back to health. That is, at least the thinking behind the latest crisis measure to come out of the Ministry of Finance after it pushed through a cut in sales tax at a meeting of EU ministers in Brussels. According to the compromise plan, national governments can choose which sectors can benefit from a cut in Valued Added Tax – a sort of sales tax smorgasbord if you like. Czech finance minister Miroslav Kalousek has singled out restaurants as a top domestic target for lower VAT. The rate is set to drop from 19 to 9 percent starting next year.

ČEZ sees easier acquisitions because of low power prices and crisis

Photo: archive of Radio Prague
One bit of good news coming out of the crisis is that Czech power giant ČEZ believes domestic electricity prices could be on a downward slide for two, three, or even five years. But the bringer of these good tidings at a three-day energy conference in Prague could also see the crisis cloud’s silver lining. ČEZ’s head of development added that economic woes could make it easier for his cash rich company to snap up energy projects at home and around the region so that it can expand. Rival energy group J&T came up with the same analysis.

Richest Czech shoots up global wealth ladder

The Czech Republic’s richest man, Petr Kellner, has also been given good and bad news from Forbes magazine’s annual richness rankings. He has shot up Forbes’ list of the world’s top 100 richest men climbing to 76th position. Kellner only scraped in at 91st place in 2008. Even so, his wealth is estimated to have fallen by a third to around 6.0 billion dollars following the drop in value of his insurance and other assets. But other global billionaires fared even worse.

Golf clubs get that sinking feeling

Photo: Jitka Mládková
But proof that the crisis is real and serious has been furnished by the business daily, Hospodářské Noviny. After years of boom, Czech golf courses are now feeling the pinch. Corporate sponsorship is down, tournaments have been cancelled, and projects for new courses frozen, it says. Some clubs are now offering reductions to keep members. The Czech Golf Travel Association has warned earnings for some clubs could halve this year. The country’s golf federation groups 131 clubs with more than 41,000 members.