In business news this week: the government approves the 2012 draft budget amidst concerns over revised economic growth predictions, wages rose by an average 2.5 percent in the second quarter while the jobless rate remains essentially unchanged at 8.2 percent.
The Czech coalition government on Wednesday unanimously approved the 2012 state budget, with a deficit projected at 105 billion crowns. The proposed budget draft reckons with revenues of 1,084 billion crowns and expenditures of 1,189 billion crowns.
The government’s main target is to narrow the public-finance shortfall, the fiscal yardstick for assessing an EU member’s readiness to adopt the euro, to 3.5 percent of gross domestic product in 2012 from 4.2 percent in 2011. The cabinet expects to trim the gap to less than 3 percent in 2013. However revised growth predictions for 2012 have cast doubt on the sustainability of the budget in its present form, with analysts predicting that further cuts in public spending may prove inevitable.
Analysts have also questioned the projected consumer growth of 2 percent in view of a VAT hike on consumer goods from 10 to 14 percent which is expected to curb consumer growth. The government is counting on higher revenues from the VAT hike to help reduce the public finance deficit, along with spending cuts and other measures.
The IMF this week revised downward its estimate for Czech economic growth in 2012 –from a previous 2.9 percent to 1.8 percent of the GDP. At the same time, the IMF slightly upped its estimate for this year’s growth to 2.0 percent. The renewed estimates are part of a global economy outlook which is threatened by the EU’s debt crisis and the lack of a fiscal plan in the US. Czech analysts that next year’s economic growth could slide even lower should Europe’s leading economies slip into recession and pull the export-oriented Czech economy down with them.
The Czech unemployment rate remained essentially unchanged at 8.2 percent in August, data from the Labour Ministry showed Thursday. The unemployment rate for women came in at 10 percent and that for men was 6.8 percent. From 2004 until 2010, Czech Republic's unemployment rate averaged 7.8 percent reaching an historical high of 10.2 percent in February of 2004 and a record low of 5.0 percent in May of 2008.
Speaking at an international conference on the future of nuclear power in the town of Trebic this week Czech Industry and Trade Minister, Martin Kocourek, said the government was planning to extending the lifespan of the Czech Republic’s oldest nuclear power plant Dukovany, and build a fifth reactor block at the country’s other nuclear plant, Temelín after 2020. Last year Dukovany was the largest single source of power in the Czech Republic, outputting 14.176 TWh. Temelín, which currently has two reactor blocks, produced 13.820 TWh in 2010.
Wages in the Czech Republic rose by an average 2.5 percent in the second quarter of the year with wage hikes outstripping price rises for goods and services in the first half of the year, the Czech Statistical Office announced this week. The average wage climbed to just under 24,000 crowns in the second quarter with the 2.5 percent rise outstripping a 1.8 percent rise in the price of goods and services. Pay rises were spread out unevenly though with wages actually falling in the non-business sector by 0.9 percent and climbing in the business sector by 3.2 percent.
The number of dollar millionaires in the Czech Republic grew by more than 29 percent to 16,200 in 2010, according to a Global Wealth Management report published this week. Analysts say that the growing number of very rich people in the Czech Republic reflects the gradually widening gap in the Czech society between low and high income households.