In the last quarter of last year, the Czech Republic managed to reduce its debt-to-GDP ratio to the lowest level since the second quarter of 2022, namely to a level equal to 44 percent of GDP. This is the most convincing indication so far that the debt development of the domestic economy is stabilizing and that the shocks that were inflicted on its public finances first and most seriously by the covid pandemic and then also by the effects of the war in Ukraine and high energy prices are finally being fully absorbed.
A year-round view also testifies to the stabilization of public finances. Last year, for the first time since 2019, it was possible to reduce the annual debt-to-GDP level, from 44.2 percent of GDP in 2022 to exactly 44 percent of GDP. Although according to the Ministry of Finance’s January forecast, last year’s figure should have been slightly lower, namely 43.7 percent of GDP.
The deficit of public finances in the fourth quarter of last year was still a relatively significant 5.6 percent, but for the whole year it corresponded to only 3.3 percent. According to our assumption, this year should end at the level of 2.3 percent, i.e. quite comfortably below the three percent threshold, which corresponds to the relevant Maastricht criterion for adopting the euro.
Lukáš Kovanda: Financial speculation is behind the astronomical rise in cocoa prices
Opinions
Traders of cocoa beans usually use futures contracts as a hedge against the risk of unwanted movements in the price of the beans. These merchants, who have beans in stock and others growing on plantations or being harvested for them or their suppliers, understandably hope that the price will go up. At the same time, however, they are now securing themselves in case the price of beans falls. They hedge by speculating on a drop in the price of beans. This is how they speculate using futures contracts.
Lukáš Kovanda
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In nominal terms, the debt continued to grow relatively noticeably last year, by approximately 231 billion crowns, but the nominal gross domestic product rose even faster, which resulted in a reduction of the relevant ratio.
The structural deficit exceeding 200 billion crowns per year remains a problem for domestic public finances, but if it continues to remain nominally roughly the same, it will “dissolve” more and more easily in the nominally growing GDP, which gradually will lead to a further decrease in public debt in relation to GDP. This year, however, the public debt-to-GDP level should be expected to be around 45 percent of GDP. However, this does not mean any destabilization of public finances.
The fact that the Czech Republic’s public finances are stabilizing is also evidenced by the fact that the Czech Republic still has the best overall rating among the countries of the former Eastern Bloc, surpassing even the less indebted Estonia. World-renowned rating agencies now generally state the outlook for Czech public finances as stable; from the negative outlook, to which some of them resorted due to the impending energy crisis of 2022, they gradually abandoned in the past months.
Lukáš Kovanda: The Czech economy performed better than expected last year. Even though people were reluctant to spend
Opinions
In the end, the Czech economy performed better than expected last year. This is a positive surprise that strengthens the assumption that this year the domestic economy should grow even beyond the so-called black zero.
Lukáš Kovanda
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Chocolate is only for the rich. The price per ton broke the all-time record
News from companies
The price of cocoa continues to rise to new records and for the first time exceeded 10 thousand dollars (232,600 crowns) per ton. Among the main causes are supply concerns due to poor harvests in important growing countries in West Africa. Since the beginning of this year, the price has already increased by more than 130 percent, the server of the news channel CNBC pointed out.
CTK
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