Economic Policy: CZSO announced a recovery of the Czech economy

09 March 2014

The Czech Statistical Office (CZSO) announces preliminary data for Czech economic performance in 4Q/2013. The Czech economy faced a sudden and unexpected increase of GDP of 1.9 per cent in the last quarter of 2013 q/q (1.3 per cent y/y). The Czech economy rose in the greatest extent among all EU economies. There are several explanations of such rise. Firstly, there has been a sudden increase in car demands which led to the recovery of car industry. Secondly, consumers decided to buy goods for fear that it could even more rise in price after the Czech National Bank intervention in November, 2013. Therefore, consumers did not hesitate in buying electronics and cars which led to the rise of GDP.
The economists soften the high expectation of politicians by stating that high level of taxation still may cause a burden on consumption of households. They consequently add that there is a positive effect of consumption and increasing public investments.
The Czech National Bank announced that the increase might have also been caused by consumers’ strategy to buy cigarettes before the January rise of excise tax. Further, the CNB expects the GDP growth of 2.2 per cent in 2014, depending on foreign demand for Czech products. The CNB also expects that there would no state fiscal interventions needed. The CNB also advocates the intervention in November 2013 which enabled relative price reduction of Czech products abroad.
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Competitiveness: Amazon is still interested in setting up distribution centre outside Brno

05 March 2014

The U.S. online retailer Amazon and mayor Roman Onderka confirmed Amazon´s plan to build a distribution centre outside Brno, after meeting in Luxembourg. Brno municipal assembly is set to vote on the project in two weeks’ time. Another Amazon distribution centre should be built in Dobrovíz, outside Prague. Amazon already opened a center for returned goods in the Dobroviz industrial zone last year.  However, plans to set a distribution center there have been stalled, because of appeals by officials from Dobroviz and two other civic associations. According to Amazon´s head of European operations, the Czech Republic was chosen for the two centers because of its position in central Europe and as a through-way to regions with increasing demand in the south. Distribution centers would together create 4,000 permanent jobs and another 6,000 seasonal jobs to cover holiday demand. Due to Christmas holiday demand, Amazon needs to have both centers ready by September 2014.

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Economic Policy: EU unemployment trends confirm North-South divide

28 February 2014

According to EC´s European Vacancy Monitor, the trends in unemployment show growing disproportionalities between the Northern and the Southern Member States. Countries such as Austria, Denmark, Sweden or Estonia show a growing shortage of labor supply, while the four Southern Member States, plus others like Slovakia, report growing competition for jobs. Overall employment in the EU has more or less stagnated in the recent quarter, while in the South it fell by 2% to 4%. What continues to be a huge problem is the youth unemployment. Not only is its rate alarming, having almost reached 60% in Greece, but the few jobs young people get are mostly lower skilled. What EU needs, according to the Monitor, is more higher skilled jobs for the young in order to boost productivity. To address these issues, the EU has set up an ambitious plan called Youth Guarantee that should help recent graduates find either further education, a traineeship or a permanent job. Some €70 million from the European Social Fund are also available to deal with the youth unemployment problem. Improving mobility is often cited as the best way to promote employment and a larger-scale use of the EURES portal by the employers and potential employees could be one of the answers, as well.

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Economic Policy: China closes in on the U.S . in renewable energy, EY says

25 February 2014

China installed 12 gigawatts of photovoltaic panels last year, more than the total amount of solar power in operation in the U.S. Further, China installed 14 gigawatts of wind power in 2013. China reached 73.1 out of 100 on the Renewable Energy Country Attractiveness Index in the fourth quarter, up from 71.6 in the third. China aims to install 14 gigawatts of solar energy this year and 18 gigawatts of wind power as a part of development of renewables to curb air pollution. On contrary, the U.S. slipped to 74.4 from 74.7. U.S. wind installations plummeted to 1,084 megawatts last year from 13,131 megawatts in 2012. The same two countries lead the index by Ernst&Young. Third place is held by Germany, followed by Japan, of which solar and offshore-wind industries are expanding. Japan surpassed United Kingdom, which currently lags behind others due to existing policies and politics, which makes investments in the sector complicated and with unclear rules.

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