The European Commission has revised its outlook for the growth of the Czech
economy this year downwards. It said on Tuesday that gross domestic product
was likely to expand by 2.6 percent in 2019, down from the 2.9 percent it
forecast in February.
The European Commission said it expected growth next year to reach 2.4 percent. Earlier this year it predicted a figure of 2.7 percent for 2020.
Officials also said they believed Czech unemployment would this year remain at 2.2 percent and would climb next year to 2.3 percent.
Over six thousand children in the Czech Republic are currently threatened with a distraint order over unpaid debts, while tens of thousands of young people have debts that they have carried over from their childhood. A new amendment to the Civil Code, set to be debated in the lower house on Monday, aims to prevent minors from falling into debt in the future.
Shares of Czech banks were down on Monday a day after Prime Minister Andrej
Babiš (ANO) unveiled a plan to ask banks to pay 10 to 20 percent of their
dividends into a new state development fund.
Mr Babiš said in a televised interview on Sunday that his centre-right government is seeking new revenue streams against a backdrop of slowing economic growth. He would not say whether the payments should be voluntary or mandatory.
He rejected the idea of a new bank tax proposed by his junior coalition partner, the Social Democrats, after having earlier said it was an option. The Social Democrats would see the tax progress from 0.05 percent to 0.3 percent, raising some 14 billion crowns.
Nearly two thirds of Czech employees can feel the negative impacts of the
ongoing labour shortage, according to a survey carried out by the Up ČR
agency. Increased workload and more frequent overtimes are among the most
common downsides of low unemployment. As a result, over 40 percent of Czech
employees are considering changing jobs, suggests the survey.
The unemployment rate in the Czech Republic dropped in March to 3 percent, which is the lowest jobless rate since last November, with the number of unemployed people decreasing to 227,000.
The Czech National Bank has lowered its forecast for the development of
public finances in 2019 and 2020, in its Inflation Reports summary
published on Friday. The bank now expects a surplus of 0.3 percent of GDP
in 2019, as opposed to February’s more optimistic estimate of 1.2
percent. The new expectations for 2020 have gone down even more sharply
from February’s 1.3 percent to the current forecast of 0.2 percent. This
year, public debt is expected to sink from 32.7 percent of GDP to 30.9
percent. Next year, a further decrease to 29.3 percent forecast.
In a prognosis released on Thursday, the bank also lowered the country’s economic growth projection to 2.5 percent in 2019 and 2.8 percent in 2020. A further decrease in the Czech crown’s exchange rate is also expected.
President Miloš Zeman has signed legislation enabling the state to tax
church restitutions, according to an official press release from Prague
Castle. Communist deputies say the highly controversial law, which had to
go through a second vote in the Chamber of Deputies in late April after it
was vetoed in the upper-house, could retain CZK 380 million from the annual
CZK 2 billion pay-outs the state has pledged to undertake until 2030.
Opposition parties including the Mayors and Independents and the Christian Democrats are planning to issue a complaint to the Constitutional Court, which they hope will invalidate the legislation.
The Bank Board of the Czech National Bank raised its basic interest rate to
2 percent, an increase of 0.25 percent, the Czech News Agency reports. It
is the first rise since November 2018 and interest rates are now at their
highest in the past 10 years.
Analysts told the Czech News Agency the increase is mainly due to developments in the country’s economy, with inflation rates rising above predictions in the first quarter of 2019 and the exchange rate for the Czech crown weaker than the bank predicted in February.
The bank has also decided to go ahead with 0.25 percent raises in the Lombard rate, which deals with short-term liquidity loans to commercial banks and the discount rate.
Raising the minimum wage tends to have a knock-on effect of higher unemployment. However, repeated increases in the minimum wage in the Czech Republic over the last few years have not that impact, suggests a new study published by the think tank IDEA, which is part of the economics institute CERGE-EI.
The Czech government wants to impose a seven-percent tax on large digital
companies, such as Facebook and Google. Under the plan, agreed by the
cabinet on Tuesday, the multinational companies would have to pay taxes in
the place they make earnings.
The cabinet is hoping the move could lead to increased revenues of around five billion crowns a year. The Ministry of Finance is due to draft a digital tax bill by the end of May.
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