Archive for May 12, 2014

Czech Economic Programme produces Growth

Many have claimed these are long overdue, but the Czech Government currently working as a coalition have released it’s predictions for the period up to 2017. Overall it’s a fairly optimistic outlook, with public spending recovering without any increase in debt levels.  It is expected that this increase in public spending will largely be covered by higher growth levels.  There was some expectation about information on various efficiency drives and cost cutting initiatives promised by the coalition – unfortunately there was little about these.

For anyone who follows Czech economics and politics there will be little surprise that one of the hot topics is that of the level of Value Added Tax (VAT) being set.  This has been a major source of disagreement between the parties who make up this coalition.  It is thought that there will  be some sort of agreement with a plan to introduce a lower level of VAT in the near future.  In the interim period is it expected that the current rates will drop a single point to 14 and 20% respectively.  Many want these drops to be much higher as well as simplifying the current rates into a single VAT and removing the lower and higher rate levels.

Growth figures look encouraging yet unspectacular, it is hoped that the Czech economy will grow by 2.0 % in the 2015 period.  This is up a few ticks from the current growth rate of 1.7%, public deficit figure currently are running at 18 and look set to rise over the next year before falling back to a manageable 1.7% of GDP in 2017.

There are specific reasons that public spending has jumped over the last 12 months.  One of the major reasons is the end of certain measures in the country’s austerity programme.  This year sees the end of a public sector pay freeze, and increased wage settlements will pay a large part in the increase in the levels of the public deficit rise.  There are also several large infrastructure projects being initiated over the next few years, some of these supported by EU grants and loans.  Some of the most important are directed at increasing the country’s telephone and broadband infrastructure.  This is especially important as there is a growing need to support the digital marketplaces and economy – there are many encouraging start ups which could end up being the next Facebook or Twitter!

Henry Cavanagh

 

Portugal Economic Recovery Still on Track

There is a feeling that the economic prospects for Portugal are at last showing some sign of recovery.    This month (May 2014) the bailout organised by the international community and the IMF is nearing it’s end.  The last review of the bailout was perhaps the first one with a slightly optimistic short term outlook.

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The IMF though did stress that there should be no let up on the economic reforms, the growth of debt is still concerning and without these reforms could easily spiral out of control very quickly.  Unemployment is probably the most worrying aspect of the recovery, it is obviously the one with the highest social cost.  At over 15% it is still among the highest in Europe and like other countries the worse affected sector are the countries young people.  However economic activity is improving all the time so it is hoped that this will filter through to the employment figures very shortly.

The reduction of GDP budget deficit is of course the core goal of the IMF bailout targets, Portugal has so far achieved or in some instances beaten it’s agreed levels.  Although the official bailout is finished this month, there will be a continuation of some payments whilst the deficit is still being tackled.

Furthermore the country has the option to request a standby loan, mainly to support the substantial shortfall that is still in existence for the 2015 economic year.  Access to the financial markets is still limited and until Portugal has full access to the credit markets then it is likely it still will need some financial assistance to stay in the Euro and maintain it’s austerity programme.

The full economic figures and economic indicators can be obtained from a variety of financial data sites.  If you want background stories and information on the European economies then check out the financial pages of the BBC website, all data should be available but you may need to use a VPN to access some of the transmitted broadcasts – here’s a guide.

James Goldwing writes on several technology and economic websites and blogs.