The construction industry is slowing down; according to statisticians. In October; it was still growing by 5.9%; but in November; growth fell to 1.9%. I don't want to scare anyone; but as a prudent economist; I would already be preparing for a recession. It may be closer than we think.
Although construction output is still growing; even economic analysts say that last year it contributed less to economic growth than other sectors. And it is preparing for a decline – building authorities issued 3% fewer building permits for apartment construction year-on-year.
In the middle of the week; the statistical office also released a report on current inflation. While a year ago the average inflation rate was only 0.7%; consumer prices have now risen by 2.5%; the highest in recent years.
The more tabloid-oriented magazine Novinky.cz came up with an amusing article on how the food company Mondelēz is addressing price increases. It used a trick that economists call shrinkflation - it left the original price of the popular Milka chocolate bar unchanged; but reduced the weight of the chocolate; thereby increasing its real price by eleven percent.
The labour market in Czechia has been overheated all year round; with the country suffering from the lowest unemployment rate in Europe; with only 270;000 people registered as unemployed at employment offices. Companies are desperately looking for people; overpaying them; while the more intelligent ones are trying to find ways to stabilise their staff.
Nevertheless; the economy is still growing. In the third quarter; gross domestic product grew by half a per cent compared to the previous quarter and by five per cent year-on-year.
However; economists predict that the economy will cool significantly in the second half of the new year and that a recession will occur in 2019.
Why take your trousers off when the ford is still far away? a proverbial saying comes to mind. There is no point in fearing a recession yet; but it is good to know that it is coming and to watch for the signs. However; it is wise to be prepared for the worst and to be ready in time – and because my colleagues at Expense Reduction Analysts and I know how much untapped potential there is in companies; perhaps it is high time to take a look at your company?
