The Czechia is on the brink of an abyss. Autumn is threatened by a double-digit economic downturn

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The prospects for a rapid recovery of the domestic economy during the autumn took hold. The re-closure of part of the business against the background of the fight against the second wave of the pandemic will send the economy down another ten percent at the end of this year.

So far, the latest version of the lockdown is to deprive companies of about a billion crowns in earnings every day. In addition, each month the deadline is to cut about one percentage point from the annual growth of the economy. According to the summer forecasts, the last quarter of this year was supposed to bring a sharp turn for the better and keep the year-on-year economic downturn in single digits.

UniCredit analyst Pavel Sobíšek said, the economic downturn in the fourth quarter would probably have occurred even without the latest government restrictions. The latest package of measures including the stop sign will only significantly deepen the decline in restaurants. After taking into account significant multiplier effects, we expect the economy to fall by 6.7 percent in the last quarter compared to the summer. The only chance to mitigate the effect is to relax the restrictive measures before the end of the year,

For the Czechia, the decline at the end of the year would mean the second quarter after the spring, during which the economy would record a double-digit decline compared to last year. This is despite the fact that the October form of the economic closure is still significantly weaker than in the spring, despite the statistics infected with coronavirus.

Raiffeisenbank economist Helena Horská said, the spring nationwide lockdown cost the economy 4.4 billion crowns a day. Current measures should fit into one billion. The final number will be determined primarily by the willingness of consumers to spend in uncertain times.

Analysts now most often see the full-year economic score around minus eight percent. the full year forecast for 2020 has thus shifted from a decline of 6.9 percent to minus 7.7 percent," says David Marek, an economist at the consulting company Deloitte. Estimates of the full-year development of the economy, however, still vary quite a bit depending on the length of the business constraints and their impact.

If the crisis escalates by the end of the year, we can expect a year-round economic downturn well above ten percent warns economist and partner of the consulting company PwC CR Petr Kříž. The decline could be exacerbated by the fact that while companies reached mainly their boom reserves during the spring closing, they will now address the survival problem more often. This applies to companies that already have problems from the first wave, ie mainly related to tourism and personal services. This is exacerbated by the fact that the most affected parts of the economy typically belong to the less capitalized and with smaller reserves recalls the economist of the consulting company EY Jan Fanta. Sectors that have so far had a positive or neutral impact on the pandemic, such as a substantial part of the IT sector or telecommunications, should continue without major problems.

The positive news is especially the development of our largest trading partner, Germany, where the situation is relatively good,adds Martin Lobotka from Consequ. He reminds, however, that the Czech state fired most of the support weapons during the first wave. "I expect that the impact of the second lockdown will be higher, especially on unemployment and consumer confidence, than in the spring, the analyst warns.