Czech Republic

Sanctions against Russia could influence Czech export in the long term

24 July 2014

Sanctions that were made by the European Union haven’t yet directly influenced Czech export. On the other hand the experts fear that the impacts could be indirect in the form of decreasing exports to Germany which make 30 % of total as some of the products eventually end in Russia. Main export sector to Russia including heavy machinery and automobiles which constitute about 70 % could be affected. Another area that will be significantly affected is the sector of foreign investments to Russia and from Russia to the Czech Republic as it could affect financing form the Czech and Russian Banks. Czech companies with ties to the Russian capital often refuse to comment the sanction regime and speculate on this theme as is the case of Škoda JS owned by OMZ owned by Gazprombank which is already on the US sanctions list.

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Czech government approved investment contract with Hyundai Mobis

24 July 2014

On 24th July Czech government approved the contract with Hyundai Mobis. Hyundai Mobis is about to build its factory for manufacturing the headlights in Mošnov. The investment will amount up to CZK 4 bn with CZK 2.6 bn eligible for the investment incentives. In its first phase in 2017-2020 th e factory should produce headlights for 750 000 cars a year and in the second phase the number could climb to 1 million products. Initially the Hyundai should create up to 935 workplaces with promised 500 workplaces in first phase additional 400 in 2021-2022 and 600 places by the subcontractrors in 2023-2024. The construction should begin in summer 2015 and should be finished in 10 months. Hyundai Mobisis the biggest subcontractor for the for Hyundai with its factory in Nošovice where Hyundai Mobis already has one factory and headlights, brakes and dashboard are produced there.

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Construction of D11 highway continues after 8 years

22 July 2014

After 8 years of forced pause the construction of D11 connecting Prague and Hradec Králové continues again. The problem was that construction of remaining 3 kilometres was halted because of land that wasn’t bought from its original owners who at first refused to sell it to the state. On 22nd July the construction began again but remaining crucial 0.27 ha of land is still missing as it is still subject to negotiation that hopefully comes to an end in the near future. Another highways to be finished are D1 from Říkovice to Lipník in October 2019, southern part of D3 from Veselí nad Lužnicí through České Budějovice to Dolní Třebonín near Český Krumlov in February 2021.

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Companies don’t agree with higher minimum wage

22 July 2014

On 22 July the Confederation of Industry and Transportation announced that it doesn’t agree with the promised raise of the level of minimum wage as it was the part of results when negotiating the name of the future Czech Euro Commissioner candidate. The wage should grow by another CZK 700 to total CZK 9 200. Earlier before employers during the tripartity said that CZK 9 000 is their maximum upper limit. The Czech Chamber of Commerce didn’t go publicly against this proposal. The change from 500 to 700 growth will cost additional CZK 750 million. Minimum wage was already raised last year by CZK 500 to CZK 8500. This further growth will influence approximately 100 000 people which make roughly 2 % of employees. In the coalition agreement the parties pledged to raise minimum wage up to 40 % of average wage which was last year CZK 25 128 that is CZK 10 000.

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Construction of 2 new nuclear power plant blocks in sight

17 July 2014

Minister of Finance Andrej Babiš along with Minister of Industry and Commerce announced that the state is planning construction of two new nuclerar power plant blocks. Whether both blocks will be in Temelín or one in Temelín and one in Dukovany is still to be finally decided. Most probably the new tenders will be announced next year. These new tenders wouldn’t originate from ČEZ they would be made in the PPP form instead. According to this model supplier would ensure the construction of the facility and its further opearation for a set amount of time. Potential players in game are Russian MIR Consortium, American Westinghouse Consortium but also Kepco as a newcomer. New bloc in Dukovany would ensure its operation until the year 2035 when thee construction should be finished.

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Banks improved their estimate of Czech economic growth

16 July 2014

Czech Banking Association in its prognosis improved its estimate of Czech economic growth. Czech economy should growth should increase by 2.4 % instead of 1.9% growth estimated in April. Next year the GDP should increase by 2.7 %. Export which benefits from the favourable situation on the main markets should remain to be the driving force of the economy. The structure of the economic growth should be balanced and compared to the previous estimate it should reflect more growing business investment activities and increased consumption. Rate of unemployment should be 7.6 % this year and 7.1 % next year. These estimates are based on prognosis of analysts of ČSOB, Česká spořitelna, Raiffeisenbank, UniCredit Bamk, Komerční banka, GE Money Bank and Citibank and are published regularly every quarter.

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Government package of legislative provisions

15 July 2014

This week during extraordinary session of Chamber of Deputies the Government presented its package of legislative provisions as it was promised in the Government Programme Statement. This package includes various new acts, norms and regulations including Civil Service Act (already in 2nd reading), cancellation of regulatory fees in healthcare (1st reading), tax benefits for families with children and working pensioners (1st reading) or reintroduction of so called green diesel.  According to the Prime Minister’s speech in the Parliament these reforms are going to support Czech economy, support its economic growth thus creating new workplaces. Most of the proposed changes are expected to come into force on 1st January 2015 should they be approved.

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Prague beats Berlin in the most visited cities ranking

14 July 2014

According to the study Global Destinations Cities Index 2014 made by MasterCard Prague is the 22nd most visited city of the world for the year 2014 and 9th most visited in Europe leading behind such cities as Berlin, Madrid or Warsaw. More than 4.9 million of foreign visitors should come to Prague which is 1.1 million visitors more than in 2009 and 400 thousand more than previous year. The tourists are expected to spend altogether 3.8 million dollars for one day stay. The winner and most visited city is for the third time in 4 years London with 18.7 million foreign visitors only to be overtaken by Bangkok last year. Second to fifth place hold Bangkok, Paris, Singapur and Dubai. In Europe the top 5 is London, Paris, Istanbul, Barcelona and Amsterdam. Study also adds that half of the world’s top 10 cities is located in the Far East.

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Economic growth rate in the CEE is about to double

11 July 2014

According to the WB prediction growth in the region of Central and Eastern Europe is about to nearly double its rate. According to the WB the region will grow by 2.6 % in comparison to last year growth by 1.4. The Czech economic would not be an exception along with Estonia with its growth by 2 %. The growth of the region is stimulated by slow recovery of former 15 members but also by gradually increasing domestic demand. Also the amount of foreign investments along with the confidence of companies of households. Among the fastest growing counties belongs above mentioned Estonia along with other Baltic countries. Only exception is Croatia that is undergoing recession for sixth consecutive year.

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Bell helicopter manufacturer opened its European HQ in Prague

11 July 2014

One of the world’s biggest helicopter manufacturers Bell opened its Headquarters for the European region in Prague. According to the  CEO John Garrison the company’s share on the second largest world market with helicopters was unacceptable and needed improvement. That’s why the Prague HQ would coordinate all orders from Europe and the helicopters would be also completed and customized in its service center. This could multiply number of workplaces that the company creates in the Czech Republic. Bell is also part of Textron Group that already has its manufacturing plant in Kněževec.

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