In this week's business news: the Czech economy slows down; the Czech crown drops against the dollar and euro; the ČEZ energy producer reports record profits; Czech music industry sales drop; and fewer tourists arrive in the Czech Republic.
Czech economy slows down
The Czech economy has slowed down. The Czech Statistical Office reported on Thursday that the economy grew by 4.5 percent in the second quarter of 2008, down 0.6 percent from the first quarter this year. The report disappointed experts as well as the central bank, as they had expected a better result. Among the major reasons behind the slowdown is the strong Czech crown, which had appreciated by some 20 percent within the last 12 months. Consumers are also worried about rising prices of goods and are spending less. The Czech Statistics Office also lowered its estimate for the economy’s growth in the third quarter of this year to 5.1 percent.
Czech crown drops against euro, dollar
Photo: European Commission
Reacting to the gloomy prospects for Czech economic growth, the Czech crown was trading on Friday at 24.56 against the euro and at 16.71 to the US dollar. Analysts say that besides those revised estimates for the Czech economy’s performance, the strengthening US currency against the euro as well as rising stock markets have caused a drop in the exchange rate of the Czech crown.
Record profits for Energy giant ČEZ
The Czech energy giant ČEZ reported record profits of 29 billion crowns, or 1.75 billion US dollars, for the first half of 2008, which is 38 percent more than last year. The state-owned energy producer and distributor has hugely profited from rising electricity prices as well as the lay-offs of some 1,600 employees. The record profits came despite decreased production of electricity as well as lower exports.
Czech banks to withstand global financial crisis
The Fitch Ratings agency reported on Wednesday that Czech banks had so far been coping well with problems caused by the crises in the global financial markets and no serious problems are to be expected in the near future. Analysts said the Czech banking sector was sound, with the prospect of generating profits. Banks will only have to deal with problems caused by the slowing growth of the Czech economy, the Fitch Ratings agency predicted.
Czech music industry sales down, again
Photo: Kristýna Maková
Sales of Czech recording companies have dropped by 21 percent in the first half of 2008, according to data provided by the IFPI umbrella organization; Czech record labels took in 133 million crowns, or nearly 7 million US dollars, in the first six months of this year. IFPI Czech Republic blames internet piracy as well as legal downloading; other say poor promotion of legal downloading web sites could be behind the fact that sales of Czech record companies have been dropping for ten years in a row.
Number of tourists slightly down in Q2
Prague, photo: Kristýna Maková
Around 3.4 million tourists arrived in the Czech Republic in the second quarter of 2008, down 0.1 percent year-on-year, the Czech Statistics Office reported on Friday. Tourists stayed in the Czech Republic for 2.9 nights on average, compared to three nights a year earlier. Most visitors came from Germany with a year-on-year drop by 10.7 percent. The highest growth in the number of overnight stays was reported for Poles (+29.7 percent) and Russians (+25.9 percent).
