Czech card transaction jump gives glimpse of economic recovery

(C) Reuters. FILE PHOTO: employee carrying flowerpots prepares an outdoor seating of a restaurant in Prague

PRAGUE (Reuters) – Card transactions at the Czech Republic’s second largest bank Ceska Sporitelna show consumer activity recovering to levels seen before the country’s coronavirus lockdown in March.

Bank data showed the volume of card transactions, including payments and ATM withdrawals, rose around 9% year-on-year in the last two weeks after dropping as much as 24% in the weeks after shops, restaurants and much of daily life shut in mid-March.

The Czech government has gradually lifted restrictions as new coronavirus cases stabilised below 100 a day through May and the death rate did not spike.

David Navratil, chief economist at Ceska Sporitelna said the card data showed swings across segments, including a 112% jump in hobby markets and a 91% drop at travel agencies, while electronics grew 47% and furniture 62%.

The bank, part of Austria’ Erste Group Bank (VI:ERST), has 2.9 million active cards in the country of 10.7 million.

“It is positive Czechs did not fall into some depression, that they are not putting off purchases of necessary things and are not significantly increasing savings,” Navratil said.

A Statistics Office survey showed on Monday consumer confidence rebounded in May.

The Czech central bank has forecast the economy will shrink by a record 8% in 2020 before rebounding by 4% in 2021.

Czech unemployment, the lowest in the European Union going into the crisis, reached 3.4% in April, from 3.0% in March, but is expected to rise as factories struggle, which will hurt consumer demand.

Banks are prepared for more bad loans, but Navratil said measures to guarantee loans for businesses and a new short-term work programme modelled after Germany’s Kurzarbeit could limit the impact of the crisis if administered well.

If that happened, he said, “the recovery would not have to last as long as it seemed two weeks ago.”