Business News

IMF warns of significant slowing in GDP growth

The International Monetary Fund this week predicted a significant slowdown in the Czech economy in 2009; the IMF said it expected GDP growth to slow to below 2 percent next year, markedly lower than an October forecast of 3.4 percent. That would represent the continuation of a downwards trend: after two years of record growth of over 6.5 percent, the Czech National Bank is predicting an increase of 4.5 percent this year.

If the IMF is right and GDP growth does fall below 2 percent next year, the Czech government already has an action plan for such an eventuality, the finance minister, Miroslav Kalousek, said this week. However he refused to give any details, saying he did not wish to create “virtual reality”.

An IMF representative said there was considerable room for the Czech National Bank to help demand by cutting interest rates without jeopardising its 2009 inflation target of 3 percent. Earlier this month, the central bank cut interest rates by three quarters of a percentage point to 2.75 percent, Europe’s lowest rate. The Czech Republic has so far been relatively unscathed by the international financial crisis, due to low foreign debt and current account and budget gaps. But the economy has been slowed by falling demand from the euro zone.

Wage growth could be at lowest level ever next year

Wage growth in the Czech Republic could reach its lowest level ever in 2009, suggests a new survey by the Czech Chamber of Commerce quoted in Friday’s edition of the newspaper Hospodářské noviny. Forty-eight percent of the 1,000-plus companies canvassed said they were not planning to increase their employees’ salaries at all in 2009, while a third said they would increase wages in line with inflation, which trade unions expect to reach 3.5 percent.

Real estate sales down by nearly one third in first nine months of this year

Real estate sales in the Czech Republic fell by 30 percent year-on-year in the first nine months of 2008, the Czech Chamber of Real Estate Agents said this week. The head of the chamber, René Hradecký, said that was due to speculators leaving the Czech property market – partly because it is now harder to get 100-percent mortgages. But Mr Hradecký said there was no reason to expect a dramatic fall in real estate prices in the Czech Republic.