This week in business news: Prime Minister Rusnok voiced his support for the National Bank’s intervention against the crown; The national bank improves its prognosis for economic growth in 2014; Unexpectedly, the economy contracted in the third quarter by 0.5 percent; Bulgaria’s energy regulator has allowed ČEZ to keep its distribution license in the country; Ryanair will renew flights between Dublin and Prague; Amazon faces opposition from local residents; Petr Kellner’s PPF buys the O2 Arena in Prague.
PM comes out in support of currency intervention
Jiří Rusnok, photo: Filip Jandourek
The caretaker Prime Minister Jiří Rusnok has come out in support of the Czech National Bank’s decision to intervene against the crown, saying that the move will help the state budget. The premier added however that he understands the concern of the public that a weaker crown will raise prices of imported goods, as well as vacations abroad. News of the intervention triggered a shopping fever ahead of Christmas with sales of electronics, which are mostly imported to the Czech Republic, jumping by as much as 35 percent this weekend, following news of the intervention.
National Bank heralds future growth
Photo: Barbora Kmentová
In its inflation report on Friday, the Czech National Bank offered a more optimistic economic outlook for 2014. The report says the Czech economy could grow by as much as 2.1 percent next year, compared to the previously predicted 1.5 percent. Inflation is also expected to grow to 2.2 percent, one percentage point above earlier prognoses. One of the main reasons why the bank decided to intervene to weaken the crown last week was its fear of possible deflation – or dangerously low inflation levels – which could drag the Czech economy back into a serious recession. The central bank’s governor Miroslav Singer told Mladá fronta Dnes on Wednesday that the bank will keep the crown at around 27 to the euro for at least another year and a half, which should increase consumer spending, support exporters and the help the overall growth of the economy.
Economy contracts in Q3
Photo: Kristýna Maková
Contrary to expectations the Czech economy contracted by 0.5 percent in the third quarter, breaking a brief period of economic revival following the country’s longest recession ever. Year-on-year GDP contracted by 1.6 percent, according to the Czech Statistics Office. Analysts had expected a 0.5 percent growth this quarter. The contraction is being attributed to lower output in several key sectors, including energy, construction and agriculture. Jan Bureš, an analyst for ERA, says the contraction in GDP only underlines the disproportion of a well-functioning export sector and a damaging decline in government investments.
ČEZ allowed to keep its license in Bulgaria
Photo: European Commission
The Czech power giant ČEZ will be allowed to keep its license to operate in Bulgaria, after the country’s energy regulator confirmed there was no reason to revoke it. Earlier this year, Bulgarian authorities launched an investigation into whether ČEZ was unfairly increasing electricity prices to its customers in response to widespread public protests that triggered the fall of the centre-right government. ČEZ rejected claims of irregular practices and said that if its license was revoked it would take the matter to a European court of law.
Ryanair renews service to Prague
Photo: Adrian Pingstone, CC BY-SA 3.0
After more than a three-year absence, the Irish low-cost airline Ryanair has announced that it will renew flights between Prague and Dublin in the spring. Only a year ago, the head of Europe’s biggest low-cost carrier, Michael O’Leary, said that his company would not fly to Prague because of the high airport fees. Now, Ryanair has decided to add nine new destinations, including the Czech capital, after fees were dropped by Dublin airport. Ryanair is planning to service ten flights a week between Prague and Dublin starting in April. The company already has regular flights to Brno and Ostrava.
Amazon’s plans in Prague hit a roadblock
Amazon’s large-scale plans to open two new distribution centers in the Czech Republic have met with disapproval from some members of the public. A group of residents of the town of Dubrovnik, near Václav Havel Airport, where the internet shopping giant wants to build one of its hubs by next year, have voiced strong concerns over the impact of the development on the local infrastructure and environment. More than 200 people showed up at a public meeting on Thursday evening demanding the construction of a ring road around the town and improved communication from the developer of the project. The developer company Panattoni says no alternative location has been selected and if there are problems, the Czech Republic may lose Amazon’s business all together, which will bring an investment worth tens of millions of crowns, as well as around 10,000 new jobs.
After Telefónica acquisition, PPF buys Prague’s O2 Arena
O2 Arena, photo: Marián Vojtek
The PPF investment group has bought a majority stake in the O2 Arena, a multi-functional structure in Prague that hosts ice hockey games and cultural events, the news website Aktuálně.cz reported. PPF was recently in the news in connection with its takeover of the mobile operator Telefónica Czech Republic, which was deemed one of the largest telecommunication deals in the past few years. PPF is owned by Petr Kellner, the country’s richest person.
