Abstract
The Czech Republic is feeling the squeeze of the global economic slowdown, and
the country’s energy
sector is one of the few showing signs of life
in the latest quarter. BMI’s latest forecast is that
construction
industry value will amount to CZK208bn in 2009, down from the CZK211bn we
were
forecasting earlier this year. The figure represents a decline from
the CZK209bn that the national
statistics office gave as the value of the
construction industry in 2008. Construction’s decline is, of
course,
in line with the country’s general economic slowdown.
Forecasting
beyond 2009, BMI sees construction industry value rising to CZK215bn in 2010,
a 1.8% rise
in real terms, and to CZK229bn in 2011, a real increase of
4.3%. We expect growth rates to accelerate to
above 5% in the years after
that. Such optimism is based upon the current global economic crisis
coming
to an end and recovery taking hold.
The latest quarter has
brought signs of global economic improvement, with strong growth now evident
in
the major Asian countries and indications in the developed world that
economic activity is picking up.
The Czech Republic is more dependent upon
the powerful export economy of its neighbour Germany
than it is on China
or U.S., but recovery in global economic engines should eventually be felt in
Central
Europe.
Our forecast for the Czech economy is that it will
contract by 3.1% this year, a deterioration from our
previous forecast of
a 2.1% contraction. BMI sees growth of 1.1% in 2010 and 3.2% the following
year.
Construction figures early this year were the worst in a decade, and
business sentiment has been
extremely pessimistic. But the Czech Republic
has few of the systemic risk factors that might discourage
investors, and
BMI anticipates a quick rebound. As a key country at the crossroads of
emerging
economies and powerful EU economies such as Germany and Austria,
the Czech Republic has
infrastructure strengths that some of its emerging
neighbours cannot match. But the slowdown is
nevertheless severe. Housing
construction was dramatically down in the latest quarter, and one minister
openly suggested that CEZ, the country’s energy company, pay a dividend
to the government to finance
infrastructure spending elsewhere. The idea
does not seem to be finding traction, but its appearance at all
at
ministerial level underlines the depth of the contraction.
CEZ was the
driving force behind a disproportionate number of infrastructure initiatives
this quarter. The
company announced plans to build two gas-burning
electricity generators, scheduled for completion in
2013 and 2015, to
replace coal-fired plants that will be closed. CEZ also signed the joint
venture deal to
build a Slovakian nuclear reactor. German energy giant RWE
also announced two gas pipeline projects.
| 
View Cart
