Trust in Czech economy hits five year low

Illustrative photo: Urs Kuester, Wikimedia Commons, CC BY-SA 3.0

The level of overall trust in the Czech economy has fallen to a five year low according to the results of a monthly industry survey conducted by the Czech Statistical Office and published on Tuesday. Among consumers and entrepreneurs year-on-year trust levels fell, while among industry and construction representatives trust levels have remained the same for the past four months.

Illustrative photo: Urs Kuester,  Wikimedia Commons,  CC BY-SA 3.0
Every month, the Czech Statistics Office conducts a survey of industry trust in various sectors of the Czech economy. Trust levels are measured according to an especially designed index of conjuncture.

Consumers and businesses alike are sent a questionnaire with relevant questions such as whether they expect to seal more business deals in the next three months.

Jiří Obst, who is the director of business cycle survey research at the Czech Statistics Agency, says that the September data show a stable level trust among entrepreneurs. Furthermore, he says that businesses see their current position as good.

However, Mr. Obst also mentioned that the results of the monthly surveys have long been affected by a high unceirtanty rate among respondents when asked about the future. Therefore, it is very hard to gauge how the business environment will behave in the next months, he says.

The data seems to have left Radomír Jáč, the chief economist at Generali Investments largely cold.

He told the Czech News Agency that while the combined data from the past three months suggests that Czech economic growth is slowing down, this is neither a surprising nor dramatic development.

Although economists in the Czech Republic have been largely calm about the issue, some in the Czech Republic have been worried about the recent slump in the neighbouring German economy and what effects it could have on Czechia.

A similar survey conducted in Germany by the Munich based Ifo Institute for Economic Research revealed that the entrepreneurial mood in the country slightly improved in September, although it remains sceptical about the immediate future.

In an interview with Hospodářské Noviny on Tuesday, David Navrátil, the chief economist at Česká spořitelna, said that this shows that German companies believe the situation in the country’s economy is not as bad as they initially expected, but that it will continue to deteriorate.

He said that while Czech industry is experiencing a slowdown, it is more robust than in Germany. However, if the German economy were to start falling by a rate of 4 to 5 percent, Czech industry would not be able to avoid a slump.