The Czech Economy Is Likely To Decline More Than Expected

The Czech Economy Is Likely To Decline More Than Expected

The closure of the Czech economy in the spring months due to a new coronavirus pandemic brought the economy back several years. Now the Czech government is suppressing business again. Although to a lesser extent than in the spring, the new measures will deal a severe blow to the economy. Industry and economists assume this. "We estimate that as a result of other measures, the total decline in gross domestic product (GDP) may reach 10 to 12%, instead of the original 8%, which we expected a month ago," said Jaroslav Hanák, president of the Czech Confederation of Industry . He added that everything would depend on how long the measures would last, to what extent, or how the overall situation would be stabilized. Especially for retail operations, which are most affected by the current closure, the months at the end of the year are most important. The chief economist of ING Bank, Jakub Seidler, also pointed out the unfavorable impact of the new measures. "While the restrictions announced last week affected about 3% of the economy, the stricter restrictions apply to about 7% of the gross value added of the economy," he said. The closure of operations will also indirectly affect other sectors and their suppliers, such as the food industry. "Anti-epidemic measures thus spill over the supply chain into the manufacturing sector. Several companies supply machinery and equipment to closed facilities. Uncertainty reduces investments," Hanák added. In addition, further closure of the economy will reduce people's interest in shopping. Nervousness will continue to rise - and it will not be just about workers or owners of closed establishments. Already, retailers fear that Christmas shopping may be as much as 20% lower. And even if the shops manage to open before Christmas.