Czech Industrial Decline Slows Down

In a recent report, the Czech Republic’s industrial sector showed signs of improvement as the year progressed. According to the Czech Statistical Office, the decline in industrial production in August slowed to 1.7 percent compared to the previous month’s 2.8 percent. While most industrial sectors experienced a decline, the automotive industry played a significant role in sustaining the overall production.

Petra Dufek, the chief economist of Bank Creditas, highlighted the importance of companies with older orders, particularly in the automotive industry, in driving and shortening delivery times. Although automobile production accounts for only about 15 percent of industrial output, it has kept the sector primarily positive over the past year.

However, the industry faces challenges due to a decrease in demand. Tomas Volf, the chief analyst at Citfin, attributed the industry’s downward trajectory to the decline in demand, especially in the production of electricity, gas, construction materials, and glass.

New orders have also declined, with an overall decrease of 4.2 percent. Domestic orders decreased by 5.5 percent, while orders from abroad decreased by 3.4 percent, as reported by Volf. This decline in orders does not indicate a positive outlook for the coming months, and it appears that the industry will continue to face difficulties.

Vit Hradil, the chief economist at Cyrrus, estimated that the industry is expected to experience a decline throughout the year. With the industry remaining at a similar level to the previous year in the last eight months, the worse part of the year is likely still ahead. The year is anticipated to end with a negative growth rate, possibly around -2 percent. The unfavorable development of the German economy may contribute to these projections.

The state of the industry serves as another signal that the Czech economy has not been able to rebound in the third quarter and has likely ended up in negative territory. This prolonged stagnation is a concerning outcome after experiencing a decline for half a year.

With cautious optimism, the Czech Republic looks towards the future, hoping for a recovery and a reversal of the current industrial decline.