Source: ING
Inflation is on the way in CEE, but it’s Hungary and Poland that have economists at ING worried. In Poland, CPI broke through the 4% barrier, while May’s figures in Hungary could extend beyond 5%. “Neither of the central banks is overly keen to react as they clearly prefer the growth factor over inflation,” writes ING in a recent report. “While we expect the National Bank of Poland to get away with it and keep rates on hold (we only expect the first rate hike in H2 2022), we continue to look for the emergency rate hikes from the National Bank of Hungary this quarter.” High inflation in Hungary would almost certainly lead to a weakening forint. By the same logic, writes ING, the Czech currency looks like the most likely to appreciate in value. The Czech National Bank has set stringent inflation targets and is considered likely to raise interest rates in Q4 of 2021. But ING’s economists are also enthusiastic about the Romanian leu, which they predict will remain steady for the remainder of the year.
Mall owners and landlords of retail space who were lucky enough not to sign lease deals with the Czech leather fashion brand Kara Trutnov are breathing a sigh of relief. The company is the latest victim of the pandemic to enter into a reorganization process led by Natland after collapsing under the weight of CZK 277 million in debts. Kara had 33 shops spread across the Czech Republic, including locations such as OC Letňany, DBK in Prague 4, the Štěrboholy shopping center and Galerie Butovice. It’s cancelled the leases on 24 of them as of the end of April. Kara was acquired by the private equity company C2H run by Michal Mička, whose financial empire has collapsed in recent months. Mička also owned the now-defunct fashion brand Pietro Filipi. The financial group Natland currently holds CZK 167 million of Kara’s outstanding debt (previously held by Česká spořitelna) and two-thirds of it is backed by Kara assets. It’s put Kara’s former owner Zdeněk Rinth back in charge of management.
During the pandemic, airlines were parking their unused fleets on the tarmacs of Czech airports. It was a visual symbol of how the spread of a tiny virus could bring the world to a halt. Now, fleets of Škoda automobiles are being stored at the airport in Hradec Králové thanks to an unexpected consequence of Covid-19: a global deficit in semiconductors. These tiny pieces of hardware have become increasingly important to the industry, writes Hospodářské noviny. It cites a Deloitte study that found that electronics have risen from 18% to 40% of the value of the average car since 2010. With their fixation on just-in-time delivery, automobile manufacturers cancelled orders for chips during the pandemic. This led to chip producers shifting production capacity to their consumer electronics customers. It’s now thought that they might not catch up with renewed car demand until 2022.
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