Business News

Czech Crown continues slide

The Czech crown is continuing a remarkable slide after spending years as one of the strongest currencies in the region. On Friday, the currency fell to around 28 crowns to the euro, whereas at the beginning of January, it had stood at around 26 crowns. The trend is similar among other central European countries that have yet to adopt the euro, and is viewed as indicative of the continued economic strife that is hitting the region. The Czech crown has also weakened against the dollar, approaching 22 crowns to the dollar. Analysts are suggesting that the trend will continue at least throughout the first quarter of 2009. However, the weakening of the crown comes as a relief to exporters in particular who have long complained that a strong crown is hurting business.

Airport privatization on ice

The Czech Finance Ministry has confirmed that plans to sell off Ruzyňe Airport in Prague are being placed on ice. Original government plans envisaged that the airport, currently in public hands, would be sold off during 2009. According to the ministry, the first priority will be to sell off the Czech national airline, ČSA, also in public hands. This will apparently then enable the airport to build up a relationship with the airline’s owner’s. ČSA traffic currently accounts for around 40 percent of flights at Ruzyňe. Despite the current state of the economy, Ruzyňe remains a profitable enterprise, which the government is ultimately seeking to sell for more than 100 billion crowns, according to reports. However, the sell off may be delayed for as long as two years, in lieu of the current economic climate.

Opposition accuses government of “doing nothing” to fight economic woes

Jiří Paroubek The leader of the main opposition party has accused the government of “doing nothing” to fight the economic woes that are facing the Czech Republic. The comments were made by Jiři Paroubek during a meeting with members of CMKOS, an umbrella trade union organisation, on Thursday. At a press conference following the meeting, Mr Paroubek accused the government of covering up the fact that it had squandered the opportunity to make use of around 860 billion crowns worth of EU grants, that the Czech economy was on the verge of disaster, and that the state budget could face a deficit of as much as 100 billion crowns. He also stated that current government efforts to fight the economic crisis may cause inflation to rise, and that the Czech Republic faced woes that may exceed those faced by Germany, which is currently in a recession. Mr Paroubek has been a long-time critic of many government policies, while opinion polls consistently place his party ahead of the governing Civic Democrats.

Beer production falls

Czech beer production fell in 2008, following record-breaking levels in 2007. According to the Czech Beer and Malt Association, in 2007 Czech breweries produced 19.9 million hectolitres, while 2008 estimates suggest a 2 percent fall to 19.5 million hectolitres. The sharp fall is largely attributed to a comparable cut in production by the country’s largest brewery Plzeňský Prazdroj, which has seen exports rise, yet domestic consumption fall. Meanwhile, overall Czech beer consumption remains flat at about 159 litres per capita, prompting a greater focus on exports. Germany and Slovakia remain the largest markets, while breweries are also enjoying a growth in exports to Russia. Foreigners visiting the Czech Republic are also consuming more beer, according to figures, climbing from 25 to 30 litres per capita of Czech consumption. Premium beers, another key market have also seen greater sales, but as the economy slows down, breweries are predicting that many Czechs will again opt for cheaper beers.

Gas supplies restored

Renewed gas supplies from Russia via Ukraine are now fully meeting the needs of Czech customers, according to RWE, the Czech Republic’s largest gas provider. Gas supplies from Russia resumed on Tuesday following their suspension in early January after a row erupted between Russia and Ukraine over unpaid bills. During the dispute, the Czech Republic relied on extensive stores of gas as well as an alternate supply from Norway, thus preventing the kind of shortages witnessed in much of eastern and south-eastern Europe. RWE has announced that it expects to receive around 90 million cubic metres per day from Russia, even though the country only consumes around 50 million cubic metres a day – the rest is transited beyond Czech borders.