Quo Vadis : global economical impacts of the current situation

Each year the French-Czech Chamber of commerce organises a Quo Vadis in cooperation with Komerční banka. The Quo Vadis serves as an economic update and prospective about the future of the Czech economy. With the current difficulties due to COVID and faced with economic uncertainty, an extraordinary second session has been held online.

What are the main features of this session ?

International financial situation:

• Financial markets are not as reserved as 6 months ago
• In the European area, the situation is very similar after the end of lockdown as we face the second round of COVID-19 : increased unemployment rate, inflation dropped to historical lows (0,3% - 2020, 0,8% - 2021), no change in rates for a long time and pandemic purchase program will be likely prolonged by ECB
  • In Germany: recovery in manufacturing sector, outlook for service sector is questionable, GDP 95 % of pre-Covid era, - 5,3% GDP, next year + 3 %
  • In France: since the end of lockdown recovered sharply – 93% of pre pandemic state, second rounds effects are expected, GDP -7% and in 2021 + 6 %
  • Central European region: GDP drop was the worst in history, fall in household consumption, retail market is already on before crisis numbers
• Experts are quite positive about the development in the region, inflation quite high but it should get into central banks goals

Situation in the Czech Republic:

• The most impacted sectors are the services (connected with tourism, sport, culture, horeca) and transportation.
• Impacts on car industry : strong improvement, export of Czech cars - monthly volume reached pre crisis numbers – that’s amazing given that the car industry completely stopped before few months
• Impact on construction sector : negative effects on demand side – it will take some time to get back – shortages on supply side (today around -10% y/y basis)

The Czech Republic is facing the second wave of the pandemic: same numbers of positive cases but less deaths, according to the experts, there is no need for government to completely close country right now. But the fear has impacts on consumers confidence and also on the depreciation of the Czech crown.