The Czech economy’s overall confidence and business mood rebounded again last month. This is mainly driven by industrial businesses that are likely to perform much better in coming months as compared to the performance early in 2016. On the contrary, building firms’ sentiment is declining, given the growth of orders in the past 12 months. New orders have declined after the strong growth set off by the completion of the absorption of EU Funds. Therefore, housing construction businesses, especially, can be confident of they receive building permits.
Meanwhile, retailers are cautiously observing the coming months, even though the retail sector is booming with domestic customers increasing their purchases. However, the retail sector is also expected to witness a slowdown in its growth to 4%-5%, said KBC Market Research in a research report. This will be consistent with the financial position of consumers’ development in 2016.
Household moods continue to be the same, unlike the ones in the business sector. Consumers are more upbeat than last year due to the optimistic expectations of the economy’s future development. Even though worries regarding unemployment has slightly grown, consumers are not intimidated by inflation and do not expect worsening of economic development.
The recent sentiment reports of various economic segments are not surprising. The Czech economy’s growth is coming back to the levels that match the developments abroad. Hence, the household consumption is likely to mainly drive the Czech economy on the demand side, whereas industry is expected to drive the economy on the supply side added KBC Research.