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Czech report Czech report
by Euro Reporter
2008-09-28 09:44:50
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While some fly

Aero Vodochody, a Czech-based maker of military training aircraft, has agreed to buy a controlling stake in Romanian competitor Avioane SA in a deal worth 16.3 million Euros, a news agency said on July 15. Aero beat bids by Italy’s Alenia Aeronautica and a Romanian company in the sale of 81 per cent of Avioane’s share capital by the government agency privatizing Romania’s communist-era industries, media reported. Aero plans to pay 4.2 million Euro for the shares, 3.3 million Euros in cash and 8.8 million Euros in investment, the report said.

Based in the industrial centre of Craiova, Avioane builds a military trainer in cooperation with Israeli company Elbit Systems. Avioane, like Aero, made warplanes when both countries were part of the Soviet bloc, but the Romanian company, founded in 1972, has struggled financially in recent years. Both countries are now in the European Union - the Czech Republic since 2004 and Romania since 2007.

The success story!


The radar story

Czech and US negotiators are likely to complete talks on the second missile shield treaty in September, Czech Defense Minister Vlasta Parkanova said on August 28. Parkanova said she also expects the centre-right cabinet of Prime Minister Mirek Topolanek to discuss the so-called Status of Forces Agreement later the same month.

The pact defines conditions for stationing US troops at a radar base Washington wants to build as part of its planned missile defense system in a military zone one hour’s drive south-west of Prague. The agreement complements a diplomatic deal signed in the Czech capital by the top Czech and US diplomats, Karel Schwarzenberg and Condoleezza Rice, in early July.

The only thing everybody is watching closely is Russia’s reaction!


Doctors’ call

Czech President Vaclav Klaus sealed a law that seeks to soften direct health care fees on patients which have been recently introduced for newborns, organ donors, nursing home residents and patients with court-ordered treatment. In January, Prime Minister Mirek Topolanek‘s center-right government had introduced the following fees: two USD for doctor’s visits and prescriptions, four USD for hospital stays and six USD for emergency-room visits in a bid to rein in waste of care and medicines.

The Organization for Economic Cooperation and Development (OECD) says Czechs see their doctors more than anyone else in Europe - 13.2 visits per year, compared to the OECD average of 6.8 visits. While the government says that the payments have already brought savings.

That’s the one side, there is another side saying that some people really need a doctor and don’t necessary have the money, what are you going to do with them?


Inflation issues

Czech Central Bank Vice Governor Miroslav Singer warned on September 17 that risks to the bank’s inflation forecasts are skewed to the downside due to weakening demand. “Risks are rather anti-inflationary, that is obvious,” Hospodarske Noviny newspaper quoted Singer as saying. Singer cited weakening demand, oil prices below USD 90 per barrel, a weak US currency, and a global slowdown among key factors taming inflationary pressures. The central bank cut its main repo rate by 25 basis points to 3.5 percent in August in light of the record strength of the crown currency and a worsening economic growth outlook. The bank is due to meet next on rates on the end of September.

Commenting on latest turbulence on financial markets following the collapse of Lehman Brothers, Singer said Czech banks were detached from these problems and he saw no immediate threats. Meanwhile, data released on September 16 showed that Czech retail sales rose in July but missed forecasts for the fifth month in a row, highlighting consumer caution due to high inflation. Retail sales rose 3.6 percent year-on-year, after growth of 1.4 percent in June, revised down from 1.8 percent previously. July’s growth rate figure, helped mainly by more workdays in the month compared with a year earlier, was below market forecasts for 4.5 percent.

Five months of similarly weak figures have highlighted the potential peril facing the export-dominant Czech economy. Unlike in its northern neighbor Poland, where retail sales are increasing at double-digit rates, consumers in the Czech Republic have kept a tight grip on spending due to inflation that has approached seven percent for most of this year. That has deprived the Czechs, for whom exports make up 70 percent of gross domestic product, of a strong second pillar for growth. The country’s economic expansion slowed to 4.6 percent in the second quarter, from 5.4 percent a year earlier, versus Poland’s slowdown to 5.8 percent. Hungary, which is worse off than either because it depends even more on exports, posted just two percent growths from April to June.

When they met capitalism, the good and bad!

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