Czech industrial production sees biggest fall since 2009 financial crisis

Foto: Capri23auto, Pixabay / CC0

Industrial production in the Czech Republic saw its biggest fall since July 2009 in March, according to official figures released on Thursday. Working-day adjusted production declined by 10.8 percent year-on-year that month, following a 0.9 percent fall in February.

Foto: Capri23auto,  Pixabay / CC0

The impact of the coronavirus crisis has also been felt in construction production. Following year-on-year growth of over 5 percent in real terms in February, it fell by 2.3 percent in the third month of the year.

Marek Rojíček,  photo: archive of the Czech Statistics Office
The head of the Czech Statistics Office, Marek Rojíček, said industry had lost about one-tenth of its usual production in March, largely as a result of government measures aimed to combating the spread of Covid-19.

That month a number of Czech companies froze production due to government restrictions and the disruption of production chains

Compared to February, once seasonal effects are excluded, industrial production decreased by 8.7 percent.

Jakub Seidler of ING Bank told Czech Television that the main reason for the slump was a one-quarter fall in auto production. A number of manufacturers in the key industry closed their gates in the middle of March.

However, a more significant decline is likely for April, when production outages affected virtually the whole calendar month, Mr. Seidler said.

The analyst said there had also been significant declines in machine production, metal construction and plastics in March. By contrast, foodstuff and pharmaceutical output increased.

Jakub Seidler,  photo: archive of Jakub Seidler
New orders fell even more than production itself, by 15.7 percent year-on-year, in March. In the case of the automotive industry the downswing was a whopping 28.3 percent.

Meanwhile, construction output, which had grown by more than 5 percent in February, fell by 2.3 percent year-on-year in March.

The coronavirus situation has particularly impacted building construction, meaning flats, offices and warehouses.

By contrast, civil engineering, which largely includes transport infrastructure, actually grew in March, albeit at a slower pace, according to the Czech Statistics Office.

In March a total of 6,222 building permits were issued, a fall of 14 percent year-on-year. This was partly because of reduced activity on the part of the planning authorities.

The approximate value of these structures reached CZK 29 billion, which represented a 17.4 percent decline.

Analysts expect a slump in the overall construction sector this year as a consequence of a recession stemming from the coronavirus crisis that is set to hit the entire Czech economy.