According to Barbara Kusak, Partner at Noerr in Prague, the Czech Republic is currently preparing for its upcoming general elections. She also notes that the Czech economy shows no signs of contraction, despite the country’s abysmal COVID-19 infection rates, and that the infrastructure, IT, and e-commerce sectors are on the rise.
“We are expecting general elections in October, so we are in the typical pre-election mood,” Kusak says with a smile. “It is difficult to make predictions, but I think that a major topic of the elections will be the country’s poor epidemiological situation and response, which heavily impacted the budget,” she says and notes that the country amassed a USD 20 billion deficit in the wake of the pandemic. Kusak also notes that the government keeps busy with the Czech Republic’s upcoming presidency of the Council of Europe.
As for the economy, Kusak reports that, overall, it still seems unfazed by the pandemic. However, she admits that certain negative effects are tangible. “The inflation is growing and our need for workforce remains,” she says and explains that the country lost potential investors due to not having enough manpower for certain projects.
Looking at individual industries, Kusak notes that e-commerce is doing very well. “We recently had a substantial investment in online grocery delivery platform Rohlik,” she says (as reported by CEE Legal Matters on March 9, 2021). Unsurprisingly, the IT sector is also booming, according to Kusak. She lists NortonLifeLock’s landmark Merger with Avast as one of the key transactions in the sector. In addition, Kusak reports that there has been no shortage of infrastructure projects. She points to the D4 motorway extension as one of the most recent examples (as reported by CEE Legal Matters on May 14, 2021). However, she notes that infrastructure projects aren’t really the primary drivers of the economy, with the Czech Republic already being quite developed.
Furthermore, according to Kusak, the automotive industry is getting back on track, after it was forced into shutdown by the pandemic, as well as the shortage of parts and materials. Also, Kusak says that the logistics sector is currently hot and has been for a couple of years. However, she explains that most of the deals are related to acquisitions, rather than the development of logistics centers, as there isn’t enough room and people “are complaining about having warehouses in their backyard.”
Finally, Kusak reports that there has not been much legislative activity in the last few months. However, she notes that the new FDI regulation, which imposes restrictions on foreign investments in strategic sectors, has been implemented in May 2021.
