Business News

Czech consumer prices showed an annual decline for the second month running and there has been speculation that the Czech National Bank may further cut the interest rates. The Czech Republic's unemployment rate stagnates at a record high level of 10.2 percent. The Czech antimonopoly authority has fined the dominant telecommunications operator Czech Telecom for abusing its market position. Dominant Czech power producer CEZ is faring well at the German power exchange. After years of decline, Czech housing construction revived in 2002. Overall construction output in the Czech Republic declined in January. Japan's air-conditioning maker Daikin Industries will invest 10 million euros to build a new plant in Western Bohemia.

Czechs consumer prices keep falling in annual comparison

Czech consumer prices showed an annual decline for the second month running, falling 0.4 percent year-on-year in February. In a monthly comparison, the consumer price index increased by 0.2 percent compared with January. The slightly higher-than-expected monthly increase was led by a seasonal rise in holiday prices, higher fuel costs and also a slight rise in water rates. The Czech National Bank expects a return to year-on-year price growth in the second quarter of this year. The Czech Republic is enjoying the lowest price rises in Europe, including the 15 existing European Union members and the 10 mainly eastern European countries expected to join in May 2004.

Is another interest rate cut imminent?

In the light of falling inflation, there has been speculation that the Czech National Bank may further cut the interest rates by at least once by 25 basis points in the coming period. The central Bank's policy-making board left the key two-week repo rate at an all-time low of 2.50 percent at its session in February, following a quarter-point easing in January. Such a cut would restore a small discount between the rates in the Czech Republic and the Eurozone which the Czech central bank likes to maintain and which was erased by last week's rate cut by the European Central Bank.

Unemployment remains record high

The Czech Republic's unemployment rate stagnated at a record high level of 10.2 percent in February. According to the Labour Ministry, 49 percent of unemployed people are women, fresh school graduates account for 10 percent. The lowest unemployment rate remains in Prague and central Bohemia - between 3 and 4 percent, while the greatest number of jobless people was traditionally reported in the former coal-mining and heavy industry regions of North-Western Bohemia and North Moravia.

Czech Telecom fined for blocking competition

The Czech antimonopoly authority has fined the dominant telecommunications operator Czech Telecom for abusing its market position by launching a high-speed Internet service last year while blocking its rivals. The fine is in the range of tens of millions of crowns. The former fixed-line monopoly launched the high-speed ADSL service in April 2002, well before its competitors were allowed access to almost four million users of the leading operator. Shortly after, the Czech telecoms regulator ordered it to stop the service. The ADSL technology speeds up the transfer of data through fixed telephone lines and is seen as a future revenue driver for all fixed-line operators, which now face falling revenue from the traditional voice services.

Power utility CEZ happy to trade in Germany

Dominant Czech power producer CEZ said its first two months at the German power exchange fulfilled its hopes for higher export prices, helping it ease the impact of a stronger crown. CEZ, the biggest east European electricity producer, has said it would seek to hike exports to western countries as it faces fierce competition on the liberalised domestic market. CEZ said the selling prices it was able to realise at the power exchange in Germany were some 20 percent higher than the company could reach by offering the power from within the Czhech Republic. In 2002, CEZ sold almost one third of its production abroad, increasing the volume by 12 percent on the year before.

Czech housing construction revives

After years of decline, Czech housing construction revived in 2002, growing 16 percent year-on-year. In total, work on more than 33,000 new flats was started. The main factors behind the development were cuts in interest rates on mortgage loans and more generous government subsidies for housing construction. The biggest housing boom was reported in Prague, where housing construction accelerated by 57 percent in 2002 as compared to the previous year. The biggest part of the construction activities were taking place in central Bohemia, which accounted for 20 percent of the total figure.

Czech construction output dips 2.0 pct year-on-year in January

According to the latest data provided by the Czech Statistical Office, overall construction output in the Czech Republic declined by 2 percent in January, as compared to a more than 3-percent growth in the same month of the previous year. The statistics office attributed the drop in construction output to an 85-percent slump in construction exports.

Japan's Daikin to invest 10 million euros in the Czech Republic

Japan's air-conditioning maker Daikin Industries will invest 10 million euros to build a plant in the town of Plzen, Western Bohemia, creating more than 100 new jobs. Daikin is another in the line of Japanese manufacturers setting up factories in the Czech Republic to take advantage of the relatively low labour costs, skilled workforce, favourable geographical position and government incentives. The Czech Republic has been a leader in central and East Europe in foreign direct investment, having attracted billions of dollars over the past years.