Business News
Czech consumer prices decreased by 0.1 percent in March, extending the deflation period to the third month in succession. The government has revealed ambitious transport infrastructure development plans. The Czech unemployment declined slightly in March but experts warn there might be a latent upward trend. The European Commission predicts that economic growth in the ten EU candidate countries this year will be weaker than expected in 2003. Contradictory expectation of development of real estate prices. EU accession should bring millions of new visitors to the Czech Republic.
Deflation continues
Czech consumer prices decreased by 0.1 percent in March, extending the deflation period to the third month in succession. In year-on-year terms, the deflation rate stood at 0.4 percent. According to the Czech Statistics Office, the decrease in the overall price level is mainly due to falling prices of foodstuffs and winter holidays. The development has fuelled speculation that the central bank may further reduce the interest rates in an effort to boost the economy which has been slowing down due to weak foreign demand.
Government reveals ambitious transport infrastructure plans
Transport Minister Milan Simonovsky said the state wants to build more than 1,300 kilometres of new motorways by 2010, investing about 30 billion crowns a year. At the same time, the Transport Ministry revealed plans to build a major river port near the town of Breclav, South Moravia, and connect it by a canal with the River Danube in Austria or Slovakia. The cost of the project is estimated at 25 billion crowns.
Unemployment falls 0.2 percent, latent upward trend
The Czech unemployment declined 0.2 percent in March to an even 10 percent, after it reached a record high in January and remained flat in February. Experts warn though that despite the decrease, there may be a latent growing trend. Daniel Munich is a professor at the Charles University Centre for Economic Research who specializes in the Czech labour market.
"It's a regular seasonal decline. In fact, looking back to previous years, the decline in March of last year was three decimal points. Its only two points this year, so it would seem that unemployment in the medium term is still increasing."
EU expects slower growth in candidate economies, urges stricter fiscal
policies
The European Commission predicts that economic growth in the ten EU candidate countries this year will be weaker than expected - at 3.1 percent on aggregate - due to the impact of a global slowdown and political uncertainties. The report also expressed concern about fiscal deficits; in particular, it criticised the Czech Republic, Malta and Slovakia for shortfalls that are expected to be well beyond five percent of GDP.
Real estate market to fall?
The Association of Real Estate Agencies said it sees a crash on the global real estate market and expects the Czech Republic to be hit in about a year, with prices of houses and flats to be the first to fall. The latest prediction contradicts previous forecasts of a sharp rise of Czech real estate prices after the country joins the European Union in 2004.
Czech republic: tourists welcome
The Czech Tourist Authority forecasts that the accession to the European Union should bring two million new visitors who would spend 50 billion crowns in the country within four years over.
