Czech finance managers optimistic about the economy but shy away from extra risks
Managers holding the Czech company purse strings are upbeat about the coming year but see the main task as expanding existing and foreign markets through conventional growth rather than through acquisitions. Risk aversion is still the order of the day and the feel bad factor is not forgotten.
The number of managers describing themselves as mildly optimistic about their company prospects rose to 43% from the 33% when the same survey was carried out six months earlier in the spring. The pessimists dropped to 6% from 8% with just over half the number of respondents now saying they expect little change in the overall picture.
The credit crunch is clearly over with four out of five managers saying bank loans are now available on a normal basis for their firms and seven percent saying they are within easy reach. The number complaining that loans were difficult to get has halved over the last year to around 14%.
But in spite of those findings and the fact that an overwhelming majority of managers don’t believe the costs of borrowing will rise this year, around two-third of Czech financial managers are still saying that the time is not ripe to take on major risks with 33% taking the opposite stance. Still, six months earlier in the spring, eight out of 10 Czech managers put themselves firmly in the risk averse category.
Not surprising then, the Czech corporate emphasis for the forthcoming 12 months is on expanding existing markets and developing new markets, followed by cutting direct and indirect costs, rather than new investment and finding extra liquidity for investment.
The Czech risk aversion is far from exceptional in the region. Out of the 13 countries across Central European and the Balkans surveyed, Lithuanian was the only country where a majority of managers said they are now prepared to take on extra risks to push their companies forward. The economy there has been growing from a deep recession since around mid-2011. Poles were slightly more open to take on greater risks than Czechs, and Hungarians and Slovaks even less so.
The Deloitte survey of finance managers contrasts with the more upbeat monthly survey of Czech purchasing managers by Markit for HSBC bank released at the start of the month. Focused solely on the manufacturing sector, it showed confidence at its highest level since May 2011.
The composite monthly economic confidence indicator released by the Czech Statistics Office on Monday showed sentiment little changed since January. Business sector confidence was slightly higher but confidence among consumers was lower with increased fears about unemployment still uppermost in many peoples’ minds. Confidence across business sectors was mixed with a slight rise in the services but a fall in the industrial sector and unchanged in the commercial and building sectors.