PRLog (Press Release) – Mar 31, 2011 – BMI View
Following elections in October 2010, the centre-right Civic Democrat party (ODS) formed a coalition with the right-wing TOP 09 party and the centrist Public Affairs party (VV). Between them, the three parties hold 118 out of the 200 seats in the Czech parliament. BMI's view is that this means the centreright ruling coalition will moderate its fiscal austerity drive, but the other existing economic policies will continue. GDP growth is expected to be 3.2% over the medium term. Although the Czech economy has not suffered as much as its neighbours in the recession, high unemployment, low external demand and the need for fiscal austerity at home are still acting as limiting factors holding back economic growth. The Czech freight industry has a central location between East and West Europe which should give it benefits as a logistics centre. Total trade in real terms over the medium term is expected to grow by 6.6%.
Headline Industry Data
* 2011 air freight tonnage is forecast to grow 1.6%, following projected growth of +1.99% in 2010. * 2011 rail freight tonnes is forecast to grow 1%, following a projected growth of 18% in 2010. * 2011 road freight tonnes is forecast to grow 4%, following projected growth of 8% in 2010. * 2011 total trade growth in real terms is forecast at 7.02%
Key Industry Trends
In November 2010 FedEx Trade Networks, a subsidiary of FedEx Corp, opened five new offices in Europe including one in Prague which it sees as an important air hub. DB Schenker opened a new logistics centre in Pardubice in late September, 2010.
The Roads and Motorways Directorate has invested in infrastructure projects and on December 3 2010 opened a new, 18.5km-long, section of a motorway between Kromeriz and Otrokovice. In November 2010 the transport minister said that the construction of motorways under public-private partnerships (PPPs) would begin in 2012 or 2013.
In early February 2011 the CFR unions started negotiations with the heads of the three state-owned railway companies in an attempt to reduce the number to be made unemployed and there is a risk of major labour unrest. The Ministry of Transport established a working group in November 2010 to study options for merging passenger operator CD and infrastructure manager SZDC into one holding company. This would increase transparency in the flow of subsidies, which are to be cut.
A proposal from the finance ministry that the government approved on November 24 2010 will merge Czech Airlines, its subsidiaries and Prague Airport into newly established joint-stock company called Cesky Aeroholding. The process is expected to be finalised by the end of 2012.
Key Risks To Outlook
Although there is a new government, the coalition has a difficult task and could prove to be fractious. The Czech economy is linked to the eurozone and further trouble with high deficits and fragile banking sectors in Spain, Portugal or Greece could lead to a double dip recession. The government appears set on merging and rationalising weak government freight transport entities such as Czech Airlines and will continue to subsidise them. Corruption is increasing in the Czech Republic with transparency international downgrading the country's corruption index and this makes the business environment much more difficult to operate i automobile news n.
For more information or to purchase this report, go