In the past weeks in the Czech business world: Almost 3700 businesses had to close in 2012; the state deficit for the last year was lower than the government had expected by 4 billion crowns; online stores had big profits in December thanks to Christmas shopping; the crown may will most likely take a hit in 2013; the Czech Telecommunication Office wants to help more mobile phone operators enter the local market.
The past year was not an easy one for entrepreneurs. Almost 3,700 businesses went under during 2012, a large portion of which were companies working in the construction sector. According to the Czech Credit Bureau, 47% more businesses and independent entrepreneurs had to close shop last year than in 2011. The highest number of bankruptcies was in the Moravian-Silesian region, while Prague took second place with 479 businesses closing down in the course of the year. As for 2013, the Czech union of small and medium-sized businesses has said that they expect the revenues of the smaller entrepreneurs to stagnate in 2013.
The state coffers, though, did not end the year too badly. The deficit for 2012 has been calculated at 101 billion crowns, as compared to the 105 billion deficit the government had predicted. The Finance Ministry credits this success to the increase in VAT and government spending cuts of 47 billion. The opposition, though, claims that the finance ministry achieved this by moving some items from the state budget to the public one. In 2011, the deficit was much higher at more than 142 billion crowns, but next year the finance minister has promised to scale the deficit down to 100 billion.
Online stores report high profits over Christmas. According to the estimates of one of the biggest price-comparison sites Heureka.cz Czechs spent around 17 billion crowns shopping on the internet. For some online stores the revenues this December were more than 40% higher than at the same time in 2011. The most common gifts purchased online were electronic books and tablets. Now both on and offline stores are waiting for money to start rolling in from the traditional post-holiday sales that began this week.
With interest rates now close to nil, the Czech National Bank may try to help the export-oriented economy to recover from the recession by helping to weaken the crown. The CNB board voted in mid-December to keep the interest rates at 0.05%. A number of large foreign investment banks like Morgan Stanley and Bank of America have also said that they expect the exchange rate of the crown to the euro to drop to a three-year low in 2013, which is why selling the crown will be one of the main trading moves of the year.
The Czech telecommunication Office announced in December that it intends to place more regulations on mobile phone operators in order to improve competition in mobile services in the country. They found the current operators on the market are colluding to a certain extent and have been preventing new operators from entering the field. The telecommunication regulator wants to make it easier for the so-called virtual operators to enter the Czech market. These operators would lease network capacity from the giants T-Mobile, Telefonica and Vodafone. The measure should help to decrease prices for the customers, which are considerably higher than in most other European countries.
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