The Biz Sheet: Weekly business news briefing for Czechia

A round-up of the top Czech and international business news, plus a look at the start-up scene, finance sector, and more.

Expats.cz Staff

Written by Expats.cz Staff Published on 21.02.2023 07:30:00 (updated on 27.02.2023) Reading time: 4 minutes

Leader Talks 👔

Where's best to invest?|Millionaires from Czechia and Slovakia say investing in foreign companies and real estate is your best bet for enhancing wealth in 2023, according to a survey by J&T Banka. Almost 1 in 3 dollar millionaires in both countries believe that land and building plots are the “most promising investment” for this year. Investment in foreign shares is viewed positively, as it is seen as one of “the only tools” that protects against inflation. Perceptions of cryptocurrencies, however, markedly declined. Furthermore, millionaires saw investment in start-ups as a worse option this year than in 2022.

Currency 💱

Lower interest rates?|The board of Czechia’s central bank is considering lowering interest rates in the third quarter should the economy develop as predicted, Reuters writes. The current interest rate is 7 percent. Declining inflation – expected to reach single digits in the second half of this year, although currently at over 15 percent – will determine whether the rates can be lowered. A wage-inflation spiral in Czechia or a loosening of monetary policy by global central banks could prevent the reduction of inflation.

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No more koruna?|A recent survey by the Czech branch of accounting firm PwC found that one-quarter of CEOs in the country would favor the adoption of the euro in the current economic situation. According to those backing the currency, it would help create a “predictable business environment.” Some CEOs believe that euro adoption would also help curb inflation in Czechia. According to its current statement of aims, the government wishes to adopt the euro by late 2025.

Winners and Losers 📊

Sweet profits|Czech drinks producer Kofola had a sparkling 2022. The firm recently announced that its profits last year rose by over CZK 1 billion, or almost 19 percent. A large boost in the sales of the company's fresh juices and herbal teas contributed to the strong results, as did higher sales of on-the-go drinks. Skyrocketing energy prices last year did, however, hinder the firm: general manager of Kofolo Jannis Samaras said that "although the result appears to be very strong, it is necessary to say that three years ago we thought that we would be much further today.”

Seismic fine|One of the main banks in Czechia, ČSOB, this week lost a years-long legal dispute against a paper company called ICEC-Holding. It must now pay a hefty CZK 3.7 billion in compensation. The affair began in 1999, when ICEC-Holding sued a company that was later acquired by ČSOB, causing the bank to inherit the legal dispute. Novinky.cz writes that a “breach of contractual obligations” – namely the illegal acquisition of a paper mill in the 1990s – led to the case going to court. For context, ČSOB posted a profit of CZK 14.3 billion last year.

Car-production problems|Despite the end of the “chip crisis” – in which there had been a global shortage of electronic chips – car production in Czechia is continuing to experience bottlenecks and delays due to obstructed access to the chips. Ekonom.cz writes that Czech carmaker Škoda Auto had about 60,000 cars unable to be completed due to missing chips. It was announced recently that Škoda would cut production at its plants as a result of insufficient chip numbers.

SELF-EMPLOYED 💻

Running from the data box|Data from consulting firm Dun & Bradstreet shows that over 40,000 entrepreneurs and self-employed people in Czechia canceled their business license in the last three months, mainly owing to the new requirement to have a data box from this year. Between 2020 and 2021, just 4,000 sole proprietors revoked their license. According to the consultancy company, this trend is almost certain to continue in the coming months. There are currently over 2 million self-employed people in the Czech Republic. 

International travel ✈️

New and renewed destinations| Direct flights between Prague and New York are set to resume on May 8, Delta Air Lines announced. Tickets are already on sale with a one-way ticket selling in the region of CZK 15,000. In March, low-cost airline Ryanair will also launch a service from Prague to Gdańsk, in the north of Poland, and in June it will also begin flying to the Greek island of Skiathos.

BUSINESS LAW 📋

The biggest change?|The Law of the Year poll opened last week for voting, which votes for Czechia's “most important business law” of 2022. In the running are new rules for online services, which among other things are designed to combat false information by making it easier to report such fake news. Another contender is a law that speeds up the construction process of new energy sources, by way of issuing building permits much more quickly. If an application for a special “green” project is not processed within one month of submission, it becomes automatically approved.

SEED REPORT 🌱

Start-up demograhpics|A summary of Czech start-ups in 2022 found a range of striking statistics. Among them, it shows that just 3 percent of all startups featured female founders, as well as the fact that almost half of all start-up founders studied computer science. The data from CzechCrunch also found that the vast majority of start-up founders (56 percent) have a bachelor’s degree as their highest education level. Around 1 in 2 of the surveyed start-up owners in 2022 had created a company in the past.

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