The Czech economy grew by 4.4 percent year on year according to figures for the first quarter of the year, a result that economists are attributing to growing foreign trade and lower government consumption. According to the Czech Statistical Office the Czech economy is currently growing faster than in Poland and Hungary, but is still slower than Slovakia, with a figure of 5.1 percent. GDP growth this year is again expected to exceed four percent. The only drawback could be household consumption which economists say has been surprisingly low in spite of low inflation and relatively strong growth in real wages.
Food, petrol, gas and cigarette prices are expected to go up over the summer and pull inflation up from last month's low. The price hikes are being linked to information about a drought in Spain and poor local harvests. The rise in fuel prices is expected to accelerate in view of oil prices and dollar movements. Other factors are price deregulation in the energy sector and a campaign against smoking. Czech inflation fell to a 17-month low of 1.3 percent year-on-year in May from 1.6 percent in April.
Three leading banks in the Czech Republic, CSOB, Raiffeisenbank and Hypotecni banka are again cutting interest rates on mortgage loans, in reaction to developments on the market, triggered by the central bank's surprise interest rate cut to an all-time low at the end of April. The cut particularly concerns new mortgages with fixed interest for three and five years.
Unemployment in the Czech Republic fell to 8.6 percent in May, down from April's 8.9 percent, the Ministry of Labour and Social Affairs announced on Wednesday. The fall, which was in line with expectations, was attributed to more seasonal work available in construction, forestry and services.
Apple Computer will open its first specialized shop in the Czech Republic this year. The shop will be located in Prague's Andel centre and will sell the entire line of Apple products. The company is aiming to operate five stores in the Czech Republic by the end of next year. The news has caused concern among some Apple product dealers, who say it will put them out of a job. A publicity campaign advertising Apple is to be launched next week.
Just over a year after joining the EU, the Czech Republic allegedly gets more from EU finds than it contributes. According to unofficial European Commission estimates, the Czech Republic contributed 554 million euros to the EU budget and received 798 million euros between May and December of 2004. The Czech Republic's position as a net recipient will be further consolidated this year as direct payments to Czech farmers will rise from last year's 25 percent of the level in the old EU countries to 30 percent. Between 2007 and 2013 the Czech Republic will be among the countries whose revenues from the EU budget will far exceed its contributions, with the difference estimated at 3.26 percent of GDP.
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