Economic Development Slows, Fails To Reach 2017 Level

Prague, Aug 7 (CTK) – The positive economic development still influences Czech firms but this year’s figures will not reach 2017’s record levels, according to a survey that the Confederation of Industry with the Czech National Bank (CNB) made among entrepreneurs in the second quarter of this year.


Even thus, none of the indicators shows a significant change for the coming months.


“Companies expect to have enough orders in the next three to six months. Positive evaluation remains also as regards growth of investment activity,” said the confederation’s chief economist Bohuslav Cizek.


However, firms still grapple with lack of employees. Moreover, they expect employment to grow moderately further this year and in 2019.


There is competition on the labour market, companies are trying to lure their rivals’ employees and fluctuation is high, Cizek noted.


Wages grew again in the second quarter of this year and supplier prices like those of energy and services are rising as well, he said.


Companies are not raising prices of their products and services in a corresponding way yet, which influences their profitability. Their profits do not grow as fast as in the past years, Cizek remarked.


The survey also shows that companies are hedging against the exchange rate risk. Nearly 20 percent of firms use euro voluntarily also in domestic transactions, which reflects the euro’s importance in the Czech economy.


Even when the Czech economy and the manufacturing industry will not reach the growth levels from 2017, their solid performance can be expected also in the second half of this year.


“We expect the economy to grow by more than 3 percent this year,” Cizek forecast.


Some institutions have revised their too optimistic forecasts and approached the confederation’s prediction.