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czech republic

CZECH REPUBLIC

NEWS REPORT
 



In-depth Business Intelligence 

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 69,590 56,800 51,400 43
         
GNI per capita
 US $ 5,560 5,250 5,310 68
Ranking is given out of 208 nations - (data from the World Bank)

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Area (sq.km) 
78,866

Population 
10,249,216 

Density 
(per sq.km) 
132.2

Capital 
Prague 

Currency 
Koruna 

President 
Vaclav Klaus

Private sector 
% of GDP 
80%

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Update No: 091 - (26/11/04)

The EU constitution approved; but still referendum expected
The Czech government in October approved the draft European constitution and decided that Prime Minister Stanislav Gross and Foreign Minister Cyril Svoboda would sign the document at the ceremony in Rome. 
President Vaclav Klaus, who has been very critical of the document, refused to sign it. The ratification process of the document has not been decided as of yet, but it is expected that a referendum on the draft will be held. 
The Czech Republic does not have a law on a general referendum although this has been a priority for the government for some time. So far, the referendum on Czech accession to the EU has been the only referendum held in the Czech Republic and it was established by a special law. 
The timing of the referendum has not been agreed to either. Gross has said he would like to see it with the probable parliamentary elections in the spring of 2006, while Klaus wants it separated so that pre-election propaganda does not confuse voters and they have access to information about the constitution. 

Smaller lead for Czech Civic Democrats
The opposition Civic Democratic Party (ODS) is still the top political organization in the Czech Republic, according to a poll by STEM. 28.2 per cent of respondents would vote for the ODS in the next parliamentary election.
The ruling Czech Social Democratic Party (CSSD) is in second place with 18.3 per cent, followed by the Communist Party of Bohemia and Moravia (KSCM) and the Christian and Democratic Union - Czech People's Party (KDU-CSL).
In the June 2002 ballot, the CSSD elected 70 lawmakers to the 200-member Chamber of Representatives. On Jul. 1, prime minister Vladimir Spidla resigned from his post following a poor showing from his party in the Jun. 13 elections to the European Parliament.
President Vaclav Klaus appointed 34-year-old CSSD interim leader Stanislav Gross as prime minister on July 26. Gross-who had acted as the country's interior minister-now leads a coalition government, which also includes the KDU-CSL and the Freedom Union - Democratic Union (US-DEU).
On Nov 5 and 6, Czech voters elected a third of their Senate's 81 seats. The next election to the Chamber of Representatives is tentatively scheduled for June 2006.

Economic good news
The Czech economy has been picking up speed in recent months. Gross domestic product in the second quarter of the year rose at a year-on-year rate of 4.1 per cent.
The Czech Republic posted a trade surplus of US$129m in September, the biggest trade surplus since April, official figures have showed.
The surplus was also the highest for the month of September in a decade. Exports were up 20.8 per cent year-on-year while imports rose by 18.7 per cent.
The statistical office said the September figures were driven by a strong surplus with other members of the European Union while the rising price of oil had pushed the trade balance with countries outside the European Union into deficit.
Analysts said the data would probably lead to a firming in the Czech currency, the crown, and would probably boost gross domestic product growth in the third quarter of the year.

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AVIATION

Czech airlines to buy 12 passenger jets from Airbus

State-controlled Czech Airlines (CSA) said on October 15th it would pay nearly US$500m for 12 Airbus passenger jets to replace older Boeing jets as part of a fleet modernisation programme, Deutsche Presse-Agentur (dpa) reported.
CSA directors awarded a contract to the European consortium Airbus for six A320 and six A319 jets, to be delivered between next spring and 2008. The aircraft will be leased in a deal worth between 10bn and 12.5bn Czech crowns (US$393m to US$492m), CSA said. The flagship carrier rejected a bid from Airbus' US rival Boeing, although the airline could buy Boeing jumbo jets in the next few years when it begins replacing its Airbus A330s for long-haul flights. CSA chief executive, Jaroslav Tvrdik said the winning bid provided "the best economic direction for Czech Airline's modernisation," noting that Airbus supplemented the package with a free flight simulator worth 300m crowns. Over the next 10 years CSA plans to expand its fleet to 63 aircraft, from the current 43, and replace its 30 Boeing 737 jets.

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TECHNOLOGY

Indal to invest in Czech Republic

Spain's Grupo Indal holding company plans to invest €10m (315m Czech crowns) in a new plant for lighting technology in the Czech Republic, Interfax News Agency reported recently.
Over the next 3 years, the project should create 100 jobs. The holding is in the process of choosing a location for the plant, having narrowed the choices to 3. The Czech Republic would become the starting point for Grupo Indal's further expansion in the Central and Eastern European regions. Grupo Indal chose the Czech Republic for the plant because of quality and availability of suppliers, skilled labour force and favourable geographic location. The firm plans to gradually shift to the Czech Republic, production of lighting fixtures demanded by clients in the region.

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TELECOMMUNICATIONS

CRa requests buyout approval

Czech telecommunications firm and radio and TV signal transmitter, Ceske radiokomunikace (CRa), has asked the Securities Commission (KCP) for approval of a public buyout of CRa shares at 440 Czech crowns apiece, Finance Ministry spokesman, Marek Zeman, said, Interfax News Agency reported recently. 
The request stems from a decision made during an October 15th extraordinary general meeting. The details, including those of financial settlement, will be announced after the KCP gives its approval and the offer is expected to be binding for approximately 4 weeks. CRa has withdrawn from a deposit agreement, for traded securities with the Bank of New York, made in June 1998.

Cesky Telecom sale via capital markets

A ministerial commission overseeing the privatisation of Czech telecommunications company Cesky Telecom (CT) has recommended to the government that it sell a 51 per cent stake on the capital markets, the National Property Fund (FNM) spokeswoman, Petra Krainova, said recently, Interfax News Agency reported.
She said the commission also took into account a recommendation from the consortium of consulting firm Credit Suisse First Boston and Czech bank Ceska sporitelna, which is acting as sale adviser.
Privatisation options for CT include a direct sale to a single investor, sale on capital markets, or a combination of the two. The government should decide on the method for CT's sale in November, but ministers' opinions on the privatisation diverge. Deputy Prime Minister for Economy, Martin Jahn, has proposed selling CT on capital markets, while IT Minister, Vladimir Mlynar favours a sale to a group of telecommunication companies and financial investors.
Prime Minister Stanislav Gross has said he would like to sell the company on the stock exchange provided the income is not considerably lower than proceeds from a direct sale. Analysts said CT's sale should generate 50-65 billion Czech crowns in revenues for the state. The government has already included the sum in next year's state budget. Potential bidders for CT include Denmark's TDC with Goldman Sachs, Vodafone, Orange and Czech financial investors, Apax Partners, Blackstone Group and CVC Capital Partners. CT netted 4.5 billion crowns in January-September 2004, a 22 per cent year-on-year increase largely attributable to its mobile subsidiary, Eurotel, the company announced on October 27th.
CT, which became the 100 per cent owner of Eurotel last December, saw its consolidated sales rise 24 per cent year-on-year to 46.5 billion crowns. Analysts had actually predicted a 26 per cent increase in profit and a 25 per cent rise in sales. Eurotel's sales rose 2 per cent to 21.9 billion crowns in the monitored period. CT operated 3.4 million fixed-lines in September, down 5 per cent year-on-year. Eurotel has 4.36 million clients, a 9 per cent increase over the third quarter of 2003.

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