National Bank says main threat to Czech economy deepening recession elsewhere in Europe

The main risk for the development of the Czech economy in the coming two years is a deepening recession in other parts of Europe, the Czech National Bank said in its annual report on the country’s financial stability published on Tuesday. A worsening recession in Western European countries could lead to a marked fall in the number of Czech exports and have a knock-on effect on employment figures. The National Bank said it expected a number of firms to go bankrupt and industrial production to fall in the Czech Republic if the situation remained bleak elsewhere in the European Union. The bank also said a prolonged spell of recession in Europe could lead to a diminishing of Czech households’ spending-power as unemployment rose.