Czech politicians commented positively on the EU summit conclusion in Nice that finally managed to re-jiggle voting powers of the member states and opened, thus, way for the EU enlargement.
The Statistical Office changed the past again: The Czech GDP fell by 0.8% in 1999 and not by 0.2% as we all thought. Also, GDP was falling in first two quarters of 1999 (by 3.7% and 0.8% respectively) and grew by 4.3% and 2.1% in first two quarters of 2000. At least, something is happening…
Industrial production grew 9.0% in October, slightly below the market consensus of 10% and below Patria's forecast of 12% growth. Although the number looks very strong, especially after 3.7% growth in September, the underlying trend is slowing: October 2000 had two more working days than October 1999, so the adjusted growth slowed to 4.6% (from 8.1% in September). Industrial sales, meanwhile, grew by respectable 12.3% and productivity jumped by almost 10%. As wages grew by 6.4% in nominal terms and stagnated when adjusted for the PPI growth, competitiveness of the Czech industry was enhanced.
The Cabinet approved a brand new scheme for financial support of Czech firms: the government will select a list of restructuring firms with a project with costs over CZK 100 mil. and will chip in 20% of the costs, hoping that the EU will join. The program looks strange (if restructuring is viable, the firm should have no problems getting support from banks, if it is not, why support it?), but it fits nicely to the Czech government erratic way of economic policy.
The Czech koruna firmed vis-a-vis the euro to 34.80 CZK/EUR (from 34.86 CZK/EUR) and weakened to 39.64 CZK/USD (from 39.40 CZK/USD). Trading was pathetic and showed no reaction to positive industrial output data neither to (positive) conclusion of the EU summit in Nice.
Bond prices got a rare positive impulse yesterday, longer state bonds gained 40 bps, shorter only 5 bps.