In this week's Business News: the Czech national debt is down for first time since the 1990s; inflation levels continue a downward trend; the new Prague metro "D" line is approved; unemployment levels are up in September; Budvar declares victory over rival in Italy and former PM Vladimír Špidla says rosy Czech poverty data is misleading.
National debt down for first time since 90s
The Czech national debt has fallen for the first time since the 1990s according to new data from the Ministry of Finance. In the first nine months of 2013, the debt fell by 14 billion crowns, currently standing at 1.65 trillion crowns. During the previous year, the national debt rose by 168 billion crowns. According to the ministry, the fall is due to reduced borrowing by the state. Former Finance Minister Miroslav Kalousek took credit for the figures, saying that austerity policies and better fiscal management were part of the former government’s plan to reduce the growth of the national debt.
Inflation levels continue downward trend
Inflation levels are at their lowest levels for three years, standing at 1 percent in September, down from 1.3 percent in August, according to the Czech Statistics Office. The figures were lower than the expected rate of 1.2 percent cited by economists polled by the Wall Street Journal. In comments made to idnes.cz by Raiffeisenbank bank analyst Helena Horská, inflation may continue to fall in the months ahead, as consumer demand remains on a similar downward trajectory. This has led to fears of potential deflation. The Czech National Bank has a target rate of two percent inflation, with economists predicting that the central bank may be forced to intervene if current trends continue. At its most recent meeting, the seven member body voted against intervention in the form of monetary easing.
New Prague metro line approved
Prague’s municipal authority has approved the construction of a fourth, or “D” section, of the city’s metro. The line will branch off from a southern section of the “C” line at Pankrác station, with six new stations ending at Písnice. Current projections are for a cost of just under 25 billion crowns, with completion of the project in 2022. However, the new line is contingent on authorities securing funding from the EU as part of its transport Operation Programme. The new “D” line conception has been scaled back from previous incarnations, in which a more ambitious extension continued northwards along the eastern part of Prague.
Unemployment up in September
Unemployment grew in the Czech Republic in September to 7.6 percent, up from 7.5 percent in August according to new data from the Czech labour ministry. In total, 557,000 Czechs were out of work during this month. According to ministry spokesperson Kateřina Beránková, two main factors are responsible for the up-tick: first, the end of seasonal summer work in both the construction and agriculture fields; secondly, an influx of graduates into the labour market. However, September also saw a very slight increase in the number of available jobs in the country, with 41,422 available spots. The Czech Republic is still below the EU unemployment average, which stands at 10.6 percent.
Budvar declares victory over rival in Italy
Czech beer-maker Budvar claimed a minor victory this week in its ongoing legal dispute with Anheuser-Busch InBev, makers of Budweiser. The company announced that the Italian Supreme Court has banned the latter from using the Budweiser trademark in Italy, while the Czech Budweiser Budvar lager can begin selling beer in the country. According to Budvar director Jiří Boček, the ruling represents a “great victory”. He added that the final verdict means that “our competitor must stop selling Budweiser beer in Italy”. Meanwhile, a spokesperson for InBev said that the company will transition to using the “Bud” brand name, but will also continue efforts to secure Budweiser trademark rights in Italy. Previously, Budvar had been forced to sell beer in the country under the name “Czechvar”.
Former PM says Czech poverty picture is misleading
Former Czech Prime Minister and European Commissioner Vladimír Špidla has accused the government of hiding behind poverty data, which outwardly suggests that the country has the lowest poverty rate in the EU. In actuality, the majority of pensioners live just above the poverty line, Špidla announced at a press conference of the Czech branch of the Salvation Army. He added that in the Czech Republic, 400,000 people live in extreme poverty. The Social Democrat briefly served as Prime Minister from 2002-2004, and now heads the Masaryk Democratic Academy think-tank. Presently, the Czech Statistics Office views a monthly wage of 9,330 crowns as the poverty line border.