According to the Czech Statistical Office, industrial production in the Czech Republic increased by 2.2% year-on-year in March. The growth was primarily driven by a significant expansion in the automotive industry, with production rising by 42% compared to the previous year and over 10% compared to the previous month. However, most other industrial sectors experienced a decline in production compared to the previous year.

The production and distribution of electricity, gas, heat, and air conditioning witnessed a particularly pronounced decrease, partly due to the high comparison base from the previous year when output from coal-fired power plants had increased. Other sectors that experienced a decrease in production included the production of other non-metallic mineral products, the chemical industry, metallurgy and foundry work, and mining and quarrying, which saw a year-on-year production decline of around 20%.

Despite the overall growth in industrial production, the value of new orders decreased by 1.7% compared to the previous year. This decline was driven by a 5% decrease in orders from foreign customers, while domestic orders increased by 5.6%. The value of new orders in the industrial sector has been decreasing monthly for the past six months, according to the Czech Statistical Office.

The metalworking, metallurgy, and foundry work sector experienced a significant decrease of over 20% in the value of new orders, while the chemical and textile industries also saw declines in new order values.

Although the growth in automotive production is positive news, the decline in the value of new orders raises concerns about demand, particularly from foreign customers. This indicates that the industry may face challenges ahead. It is crucial for policymakers to closely monitor the situation and take appropriate measures to support the industry as necessary.

The Czech Republic’s industrial sector is still in the process of recovering from the impact of the COVID-19 pandemic. While the automotive industry has shown resilience and strong performance, other sectors are still struggling to return to pre-pandemic production levels.

Furthermore, the decline in the value of new orders suggests potential obstacles on the path to recovery. Policymakers must remain vigilant and implement supportive measures where required to facilitate a robust and sustained industrial rebound.

Article by Prague Forum