The Czech Republic consumer confidence indicator dropped by 1.1 points to 97.3 in August, with the share of respondents expecting the overall economic situation in Czechia to deteriorate over the next 12 months increasing significantly from the previous reading.
Sentiment among consumers declined for the fourth consecutive month, mainly due to concerns about the uncertain economic outlook and the potential impact on their financial situation. Around a third of households report that they are struggling to make ends meet with their current financial resources, and almost 10 percent have to make do with savings or borrow money.
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Households are already feeling the consequences of mounting uncertainty around the economic outlook, with the average registered number of employees in industry dropping by 2.1% in June from the previous year.
The business confidence indicator fell by 1.5 points to 93.0 in August, with the mood worsening in all sectors except industry. It fell most sharply in the service sector, including the financial sector, reflecting an expected reduction in demand in the coming months.
The consumer and business confidence deterioration is worrying news for economic recovery. For now, analysts stick to their 0.9% projection for annual real GDP expansion within the central scenario of a continued, though gradual, economic recovery in the quarters ahead.
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