Business News

Economy shrinks by 1.0 percent in 1Q

The Czech economy contracted 1.0 percent in the first three months of 2012, the second-worst result out of 19 EU countries covered in the latest data by the European statistical office, Eurostat, released this week. Only Hungary fared worse on the list, with its economy shrinking by 1.3 percent of GDP from January to March. Among countries not included in the new survey is debt-ridden Greece. Overall, the economy in the EU in the first quarter of 2012 grew by 0.1 percent year-on-year, while it stagnated in the Eurozone.

Ombudsman: reforms have put thousands on brink of poverty

Pavel Varvařovský The country’s ombudsman this week slammed the government’s wide-reaching reforms and a new system, in place since January, streamlining and in some cases slashing social benefits. According to Ombudsman Pavel Varvařovský, the changes have left thousands of families hard hit, not least seniors, families with lower incomes, and families with members with serious health problems. The ombudsman said on Thursday that his office had witnesses a major increase in appeals for help – some 500 more than in 2011 – and the ombudsman has called on MPs in the lower house to raise benefits again. In response, the Minister for Labour and Social Affairs Jaromír Drábek defended the reforms, telling Czech TV they had eliminated distortion within the system, including an apparent “redundancy” or “doubling up” of some social payments.

Price of Czech garlic set to go up

Sources, including Czech TV, note that domestically-grown garlic, reportedly favoured by local consumers despite costing nearly twice as much as some imports, has become difficult to obtain in some supermarkets and grocery stores. Domestic producers this year have been hard hit and have only been able to cover one-fifth of demand; much of the potential yield was destroyed by unexpected swings in weather conditions this winter. Because of its scarcity, the cost of Czech-grown garlic will go up: according to Czech TV, a kilo of Czech garlic currently costs 190 crowns, compared to 99 crowns for garlic imported from China.

Czechs more careful about how they spend at supermarkets

Czechs are apparently more careful when opening their wallets in supermarkets than in past years; (other than perhaps garlic) they have been choosing more carefully how much they are spending. Czech TV reported that at least for now supermarket sprees are over. According to the public broadcaster, a single grocery purchase four years ago averaged around 800 crowns; today the number has fallen to 500. Market analysts have confirmed that local consumers – impacted more significantly in 2011 by the continuing economic downturn – were not only changing their shopping habits but also their favourite stores – shopping at whichever outlet offered the best prices, coupons or other deals. A recent study suggests that 85 percent of Czech consumers are influenced by coupons, while 61 percent change their favourite store based on better deals.

Press: Czech bank sector sees continued success

Domestic banks pulled off a ‘minor miracle’ last year, financial website ihned reported this week, stressing that while many banking houses abroad needed state support to survive, in the Czech Republic banks have prospered, indeed, reported record gains. Analysts say domestic banks’ success is mainly due to conservative strategy and growth in the mortgage market. The so-called “big three” in the Czech Republic - Česká spořitelna, ČSOB a Komerční banka – posted 143.7 billion crowns over the last four years despite the global economic downturn, roughly six billion more than in the years 2002 – 2007.