Confidence in the Czech economy fell again in January after growth in December. The composite confidence indicator decreased by 1.3 points to 87.3 points compared to December. Confidence among entrepreneurs has fallen, and has fallen even more sharply among consumers. This follows from data published by the Czech Statistical Office.
“The beginning of the year was marked by a decline in confidence in all monitored sectors of the economy. Entrepreneurs across sectors evaluate their economic situation or current demand negatively,” said Jiří Obst, head of the CZSO business cycle research department. However, according to him, some entrepreneurs expect improvement within three months. “The already great fears of consumers about the increase in unemployment continued to grow, hand in hand with fears of a worsening of the overall economic situation,” Obst added.
The business confidence indicator decreased by 0.7 points to 87.1 points compared to December, while that of consumers decreased by 3.5 points to 88.5 points. The data for December have changed as the CZSO regularly recalculates the figures in January.
The December improvement in statistics was attributed to the fact that the survey was conducted in the first half of the month, when measures against the spread of coronavirus were being relaxed. Previously, the indicator grew month-on-month from May to September, declining in October and November. In January, confidence remained significantly lower year on year than a year ago, in the run-up to the coronavirus epidemic in the Czech Republic.
Business confidence in industry fell by 0.3 points month-on-month to 93.2 points in January. In construction the indicator decreased by 2.4 points to 108.5 points, in trade it decreased by 3.1 points to 90.4 points.
In services, including the banking sector, confidence was 0.7 points lower in December compared to December 78.1 points. “A regular quarterly survey in the services sector showed that almost a third of respondents cite insufficient demand as a barrier to production growth, 28 percent of respondents limit other factors in production growth, probably related to preventive anti-pandemic measures,” Obst said.
Consumers’ concerns about rising prices also rose in January, along with fears of rising unemployment and a deterioration in the overall economic situation. The number of people who intend to save has decreased, and consumers’ concerns about their own financial situation are about the same as in December.
