The Czech government needs to invest hundreds of billions of crowns to shore up the economy, with the crucial auto industry particularly vulnerable. Measures being taken now will alleviate the unemployment that will inevitably follow the coronavirus crisis. And the weak crown is of no benefit to exporters if they aren’t producing anything. So says the vice president of the Czech Confederation of Industry, Radek Špicar, who I spoke to late last week.
Fuel prices in the Czech Republic continue to drop. The price of the
best-selling petrol, Natural 95 dropped on average by 93 hallers to 27.90
crowns per litre in the past week, the lowest price since April 2016. At
some petrol stations it is selling for 23 crowns per litre.
The price of diesel dropped by 64 hallers to 27.96 crowns per litre, according to data from CCS, which monitors fuel prices. According to analysts fuel will continue to decrease in the Czech Republic.
The travel ban instituted due to the ongoing coronavirus epidemic has had an effect on the prices of rent within Prague, with some owners of Airbnb properties offering their flats for long-term rent instead. A wider impact on property prices is also possible, some experts say. In order to stimulate the housing market, the finance minister has proposed the cancellation of the real estate transfer tax.
The government aims to fast-track legislation to untie the Czech central
bank’s hands to be active in the bond market. But Prime Minister Andrej
Babiš (ANO) told MPs on Tuesday that does not mean any immediate
The Finance Ministry said in a document accompanying the bill that the government was just fast-tracking, as part of its response to the coronavirus pandemic, Reuters reported.
The amendment widening the central bank’s powers to buy securities on the market does not alter a ban on monetary financing nor allow the central bank to enter the primary government debt market.
The Finance Ministry plans to issue government bonds worth 33 billion crowns in April. As of December, it had planned to issue medium- and long-term bonds worth at least 120 billion crowns on the domestic market in 2020.
Bank card data collected last week show that a large number of Czechs
quarantined after returning from Italy or some other high-risk destination
do not respect the restriction.
The data collected by the initiative COVID19CZ showed that 46 percent of Czechs back from holidaying in a high risk destinations violated their quarantine at least on one occasion, using their card to pay in restaurants or shops, according to Petra Bednaříková from DataSentics.
According to the news site Seznam.cz, data from bank cards may be used to map quarantined people’s movements, similarly as is happening with mobile phones.
ING’s latest economic and financial analysis on the economic costs of Covid-19 predicts the Czech Republic will show negative GDP for full-year 2020. The volatility of the Czech crown will remain “extra elevated”, it says, given the positioning-related moves in the currency and the risk of central bank interventions.
The Czech government and central bank have announced further measures to offset the impact of the coronavirus on large firms, small businesses and households. While economic growth is certain to drop steeply in the near term, the authorities and experts note this country is better prepared than most to weather the storm.
The Bank Board of the Czech National Bank has adopted measures to mitigate
the impacts of the coronavirus epidemic on Czech firms, businesses and
At its monetary policy meeting on Monday, the Bank Board lowered the two-week repo rate by 50 basis points to 1.75%.
At the same time, it lowered the Lombard rate to 2.75% and the discount rate to 0.75%. The vote was unanimous.
The change in rates takes effect on Tuesday, March 17, 2020.
In addition, the Bank Board declared that it was ready to cut interest rates further should the economic situation so require.
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