Czech 2011 budget deficit higher, retail sales down

Aktualne.cz
2. 9. 2011 12:36
New data on Czech economy reinforce fears of a new economic slowdown
Government spends more, households less... Not a good prospect for the Czech economy
Government spends more, households less... Not a good prospect for the Czech economy | Foto: Aktuálně.cz

Prague - In the last weeks, fears of a new global recession have been growing.

Most recently, they were fuelled by new data on global manufacturing production, pointing to a deceleration.

New data on the Czech budget deficit and retail sales do little to lift the mood. The data show that the Czech budget deficit has been growing faster this year than in 2010, while Czechs spent less in July 2011 compared to one year ago. 

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At the end of August 2011, the government budget was in deficit of CZK 87bil (EUR 3.6bil). One year ago, it had reached only CZK 78.7bil (EUR 3.26), which is CZK 8.6bil (EUR 356mil) less.

The figure was released by the Czech Finance Ministry.

"The main reason behind this result are lower total revenues, which decreased 0.6 percent compared to the previous year, while the budget after changes projects a 6.9 percent growth," the ministry explained in a statement.

The treasury is allowed to run a CZK 135bil (EUR 5.6bil) budget deficit this year.

The revenues of the government budget decreased 0.6 percent this year, which equals a CZK 3.8bil drop.

The state managed to collect CZK 16.9bil more in taxes and social security payments, but other state revenues dropped by CZK 20.7bil. More than half of this sum (CZK 12.3bil) is composed by a drop in transfers from the EU and the National Fund.

In addition, the government appears to be spending more in comparison to one year ago. In August, the total expenses for 2011 were 0.7 percent higher than one year ago. This means CZK 4.8bil more.

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Retail sales stagnate

In July, retail sales in the Czech Republic stayed on the same level as in the previous month. In addition, compared to July 2010, they grew only by 0.1 percent point. When adjusted for seasonal influences, they actually dropped by 1.7 percent, according to the Czech Statistical Office.

It appears that Czechs have started to spend less on food, which was the main reason behind the drop in retail sales.

Read more: Czech jobless rate edges up, industrial output drops

The data surprised analysts who expected only a 0.3 percent drop. "The retail sector stagnates. Today's data are in accord with this year's overall macroeconomic picture of the Czech Republic - a very slow growth with a stagnating household consumption, where the only positive factor is export," said Pavel Mertlík, an economist for Raiffeisenbank.

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Zdroj: ČTK
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