In the final quarter of 2008, the global slowdown hit the Czech Republic hard. Industrial production, which had risen by 4.2% year on year in the previous quarter, plummeted by 13.2%. The registered unemployment rate jumped to 6.8% in January 2009, from 5.1% in September 2008. Car manufacturers, whose exports to the rest of the EU are likely to fall heavily as European consumer demand contracts, have led the job losses but the sharp rise in unemployment suggests that other sectors are following.
"The Czech Republic is an open economy that is quite export dependent. We once calculated that a slowdown of one percentage point in the GDP [gross domestic product] growth rate in Germany translates into a slowdown of between 0.3 and 0.4 percentage points in the Czech Republic," says Gernot Mittendorfer, CEO of Ceska sporitelna. This is a troubling correlation at a time when the European Commission is forecasting a GDP contraction of 1.9% in Germany in 2009.
