Survey results indicate a slight decline in the rate of economic growth

We have published the results of the ninth annual joint survey of the Confederation of Industry of the Czech Republic with the Czech National bank. These results represent findings from the first quarter of 2019.

The respondents of this survey represent a key part of industry in the Czech Republic. Industry plays a significant role in the Czech economy and is a crucial factor for development of the whole country. This survey is thus a relevant leading indicator which shows trends and is indicative of the real economy.

These survey results indicate a slowdown in the rate of economic growth. Despite the lower values in different parts of our survey, no significant change in the trend can be predicted.  Nevertheless, some specific indicators in the current survey already show a slight decline.

For example, the assessment of domestic and foreign demand deteriorated in 2019. This change is visible on the following chart.

However, according to the survey results, the decline in demand assessment should not deepen as for example respondents' expectations regarding orders are still positive.

 domestic demand obrazek aj

Source: Confederation of Industry of the Czech Republic. This figure represents the perception of change of domestic demand on year-on-year base. Therese percentages represents Improvement od Deterioration, rest of responses up to 100% represents “no change” opinion.

According to the results of the survey there are expectations of wage growth. This growth reached its peak at the end of 2018.

Despite this, the current growth and expectations of future wage developments are relatively high. Wage increases are expected by entrepreneurs to grow between 4% and 5%. Thus, the relative development of wages is still above the growth rate of labour productivity.

External threats still predictably remain as important factors in future growth, such as expectations and measures due to Brexit, the introduction of new tariffs and taxes, trade warfare and the resulting decline in exports, and the economic and political deterioration of our trading partner countries. We consider the larger of these threats to have already negatively affected the economy, but uncertainty itself in the behaviour of entrepreneurs and markets should be a relevant factor with an impact on reality.

Here are available all results from the survey (in Czech language).

Vladimír Štípek
section Aktuálně