The December business sentiment confirmed the favorable news for the Czech Republic, despite a strong second wave of the pandemic, the industry is not doing badly at all, reports Patria.cz.
Although the Czechia dominates the sad COVID ranking, it reached the largest number of infected people in the world (per million inhabitants). However, it seems that, as in Germany, industrial production has not yet been significantly affected. The latest PMI index in industry shows not only solid growth in production and new orders, but also the recruitment of new employees in the backbone sector of the Czech economy.
The vision of the vaccine seems to be slowly reviving investment and purchases of consumer durables, which is confirmed by further improvements in the mood in German industry. In the Czech Republic, however, the PMI index is not such a reliable mover and it will be more sensible to wait at least for the November “hard numbers” from industry – the Czech Statistical Office is to publish it at the end of this week. If the current good news from industry is confirmed, the impact of the pandemic on the Czech economy will not be nearly as bad as during the spring wave. Based on the relatively optimistic news from industry so far, Patria.cz nowcast shows a decline in the Czech economy only by 1-2% (quarter-on-quarter).
For 2021 and the mood in the markets, however, it will probably be more important in the end to monitor the pace of vaccination and the ability of governments to effectively support economic recovery. The first quarter is likely to be weak anyway in Germany and the Czech Republic due to restrictive regulations. In the second quarter, however, according to the plans of the Ministry of Health, the Czech Republic should vaccinate more than a million people a month and with the help of warmer weather, move towards permanent loosening of restrictive regulations.
