In Business News this week: the IMF predicts a shrinking economy; no date with the euro for now; fair or foul scrap incentives; the sun rises on Czech solar power; and why to feel sorry for the car dealer.
IMF warns Czech economy could shrink by 1.3 percent
The International Monetary Fund has warned that the Czech economy could shrink by 1.3 percent this year. The IMF said exports, especially to the Czech’s main trading partner Germany, will be hit by the world crisis and local demand will also be subdued. In its previous November forecast, the IMF predicted Gross Domestic Product would rise by 1.5 percent this year. The Czech Statistical Office reported on the same day that Czech exports dropped by nearly a quarter in February compared with a year earlier. The Czech economy grew by 3.1 percent in 2008.
Euro deadline delayed
Photo: Štěpánka Budková
Outgoing Finance Minister Miroslav Kalousek has said that the Czech Republic will not keep its pledge to declare when it intends to adopt the euro by November 1. Mr Kalousek not surprisingly said that early elections in October now made this promise to give a euro date impossible to keep. What is more, the ministry pointed out that last year the country failed to meet the inflation criteria for qualifying for the euro zone and the currency was still not in the Exchange Rate Mechanism, another required step before entry. Analysts warn that the government’s ballooning budget deficit this year could be yet another hurdle to membership.
Competition office scours scrap incentives
ČEZ marketing director Milan Mika, photo: CTK
With scrap incentives for trading in old for new equipment all the rage, the Czech competition office has intervened to ensure that some of these offers are not bending the rules. In a highly publicised move, the office has said it is investigating energy giant ČEZ’s offer to pay 1,000 crowns, around 50 dollars, to customers who trade in an old fridge, freezer or washing machine for an energy saving new one. The problem is that ČEZ paired up with just two major consumer electrical goods stores. This left a third major player out in the cold and feeling that its competitive position had been undermined.
Bright perspectives for solar power
Still on energy, solar power is enjoying a boom in the Czech Republic. According to the country’s energy regulator, the number of solar power plants rose by a third in the first quarter of the year to around 1,600. The number of solar plants has increased by 650 percent since the start of 2008 with the productive capacity of the latest facilities up 20 percent. One of the biggest factors in the rise is the high guaranteed price the state pays for solar generated electricity with costs for installing the equipment also falling.
Crisis drives out car dealers
They have a reputation for being slick and smooth talking but now they are looking pretty sorry – save a thought for car dealers in these difficult times. A survey by PricewaterhouseCoopers this week says one in 10 Czech car dealers is now thinking of throwing in the towel because margins have been cut so hard that can hardly turn a profit. The company polled a representative sample of 61 Czech dealers. Seven out of 10 dealers said they saw no chances of growing their sales this year and four out of 10 were gloomy about the five year outlook.
