The Czech Republic is facing a slowdown in industrial production, with industrial output declining by 2.8% year-on-year in July. This marks the first decline since January and follows signs of a slowdown in June, where industrial production saw a year-on-year increase of only 0.9%.

Several factors are contributing to this decline, including more extended summer shutdowns, higher comparative bases in the production and distribution of electricity and gas, and decreased demand from the construction industry, which has impacted the output of other non-metallic mineral and plastic products.

The decline in industrial production is concerning for the Czech economy, which already experienced slow growth in the second quarter of 2021, with a year-on-year growth rate of just 1.1%. This drop in industrial production is expected to further impact economic growth rates.

Economists are calling on the government to take action to boost the economy. One proposed solution is to increase spending on infrastructure projects, which could create job opportunities and stimulate demand in the construction sector. However, the government has expressed reluctance to increase spending due to concerns over rising debt levels.

The future trajectory of the Czech economy will depend on various factors, including the vaccination rate and global economic conditions. While experts remain optimistic about a potential economic recovery in the second half of the year, it will require concerted efforts to address the challenges posed by the decline in industrial production and ensure sustained growth.

Article by Prague Forum