A Q3 2012 survey conducted by the Confederation of Industry among almost 200 member firms said that Czech industry will not recover at any time soon and real gross domestic product will contract by an annual rate of around 1%.
The Confederation's president Mr Jaroslav Hanak summarized the results of the survey, saying that "The economy is at its weakest in two years, uncertainty and lack of confidence continues, the amount of orders is unlikely to grow, employment will drop modestly. The results are not so catastrophic but the current period and the period around the turn of the year will be difficult for firms and unfortunately the business environment does not provide any help either."
The Confederation's analyst Mr Boris Dlouhy said there is a minimum of positive signals, one of them being a slight increase in investment spending. There is, however, a number of neutral signals, for instance, loan accessibility. Negative signals are still the same, uncertainty, deteriorating indicators that are cutting growth and worsening business environment.
Mr Ladislav Novak head of Chemical Industry Association said that "Unpredictable business environment is fatal for businesses."
Representatives of industrial associations largely complain that they still do not know what tax rates will be in force next year or how much will energies rise.
Mr Hanak criticized the latest proposal of Finance Minister Miroslav Kalousek who wants to find over CZK 20 billion worth of savings in next year's budget. He added that "Cutting down of growth expenditures is unacceptable for us as it is eliminating competitiveness of the Czech economy."
Mr Kalousek wants to cut spending on research and development, for example.
Compared with 2011, businesses see the greatest deterioration in public finance sustainability (31%), legislation level and corruption (25% each), bureaucracy (23%) and transport infrastructure (19%). An improvement in these areas was seen by only a few percent of respondents.
Businesses still expect a wage growth lower than 2% in 2012 and next. For this year, they estimate a pay rise of 1.85% and for next year a wage hike of 1.65%, slightly above the Q2 estimate. They put consumer inflation at 2.5% in 2013. Real wage will not be rising. Businesses also expect the growing input prices to be only partially reflected in the output prices.
Employment will be falling moderately in the months ahead, according to firms. In the next 12 months, they expect a 12% annual growth in investment expenditures. The volume of orders will be falling in the next six months. Both foreign and domestic demand is declining.
Source - Czech News Agency
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