Basics of economy remain bleak
The Prague Post | 14.10.2009 | rubrika: Business | strana: 7 | autor: Claire Compton
Analysts warn the economic downturn is not yet finished
Industrial production fell 8.4 percent year on year in August, a drop that isn’t nearly as bad as July’s fall of 18.2 percent, the Czech Statistical Office said Oct. 12. The numbers may be deceiving, however, analysts warn, as the yearonyear comparisons are indicative not of an improving economy this year, but rather the worsening figures from last year, and partial swings don’t necessarily mean steady upturns. The fall in output came primarily from the manufacture of fabricated metal products, machinery and equipment and electrical equipment. On the positive side, output grew in the manufacture of motor vehicles, trailers and semi-trailers, as well as food, beverages and tobacco. Václav Matyáš, president of the Association of Building Entrepreneurs, told the Czech News Agency that general construction is influenced mainly by public orders for transport infrastructure, and building construction, which includes flats, has been falling for quite some time.
“Our view of the future is not optimistic,“ he said.
The Confederation of Industry was similarly pessimistic about August’s figures and said it was largely influenced by public subsidies from the larger economies. Real fundamental economic indicators remain discouraging, said Boris Dlouhý from the confederation.
“The development of industrial production corresponds to the record-low volume of foreign trade, where low imports and investment activities of firms do not indicate an early revival, as well as the growth of unemployment,“ he said.
Month-on-month industrial output was up 4 percent, largely due to the continued boost from carscrapping subsidies in neighboring countries that are stimulating demand for the auto industry, the Czech Republic’s largest export business. In August, the auto industry posted its first year-on-year rise since September 2008. While that may seem promising, the trend isn’t expected to continue. Carscrapping subsidies ended in August in several countries. Analysts say no real improvement is expected from industrial production until the beginning of next year.
Industrial output has been on the decline for nearly a year, and its effects are finally becoming manifest through other indicators.
The number of workers in industry is 14 percent lower than it was last year, and analysts expect that trend to worsen before it improves.
Economists are forecasting an average industrial output to be down roughly 13 percent for the whole of 2009, compared with 2008. While the low comparative base of last year’s waning months will make figures look slightly better in November and December, companies continue to shorten work weeks, which will hamper any growth in output.
