Czech Republic: Economic sentiment plunges in November, dragged by lowest consumer confidence level in over a decade
November 24, 2011
In November, the economic sentiment indicator published by the National Statistics Office plummeted to 86.6 points from 90.4 points in October, which represents the lowest level since January 2010. The reading more than offset the slight improvement observed in the previous month and now remains 6.1 points below the level observed in the same month last year. The November fall reflected declines in both sub-indicators, particularly in the consumer confidence component. The November survey showed that a majority of businesses continue to hold a pessimistic view of the current economic situation. In addition, a majority of respondents to the November survey lowered their expectations for the economic situation in the next three as well as six months and were consequently more pessimistic about an increase in total demand, particularly in the services and trade sectors. Moreover, consumer confidence deteriorated significantly in November, with the sub-indicator falling to its lowest level since September 1999. The reading reached even lower levels to those seen during the global financial crisis in 2009. According to the Statistics Office, the reading showed that a majority of consumers are more afraid that the general economic situation will worsen in the next year and, consequently, assessed their own financial situation more pessimistically compared to the previous month. Moreover, more respondents to the November survey expect a rise in unemployment.
Author: Ricardo Aceves, Senior Economist