Since March 2022, Petr Dufek has become the Chief Economist of CREDITAS Bank and the entire CREDITAS Investment Group. He studied national economy at the Faculty of Economics of the Mining University – Technical University of Ostrava (VŠB). From 1997 to this year he worked as an analyst in various positions at ČSOB. He mainly focuses on the development of the Czech and European economy and financial markets. He also works at the Department of Monetary Theory and Policy of the University of Economics in Prague and is a member of the Scientific Council of the Faculty of Economics of the VŠB.
Interview with PETREM DUFKEM, Chief Economist of CREDITAS Bank and of the entire CREDITAS investment group.
You have been transferred to CREDITAS Bank after a long stay at ČSOB. What have you done and in what positions have you worked?
25 years ago, I joined ČSOB as an analyst in strategy, from where I moved during the year to the chief economist department and then to financial markets. I mainly focused on the development of the Czech economy, the national banking sector and local financial markets.
Why did you choose CREDITAS Bank for your future job?
The offer I received was interesting in several respects – one of them is the fact that it is a stable Czech bank with a good history, offering high-level services. And apparently she came at the right time.
With what experiences and visions do you come to CREDITAS Bank?
I come as an analyst who has worked on figures from national and European economies over the past quarter century, meeting clients and business partners from banking, media. . So I hope it will benefit both parties.
For a long time you focused mainly on the development of the Czech and European economies and financial markets. How has the situation in these markets evolved during this period?
It is probably impossible to sum up what has happened in the European economy and financial markets over the last two or two decades. During this time there have been several financial crises which have been very interesting in themselves, be it the end of the fixed krona exchange rate, the US tech bubble, the mortgage crisis, the European debt crisis , if I remember the most interesting . The position of the major central banks, which quite willingly became each country’s largest creditor, has changed considerably in recent decades.
What are the most pressing issues currently affecting the Czech and European economies? What are the biggest problems in financial markets today?
The last two years have arguably been a pandemic, which has altered and sometimes upset well-established supplier-customer relationships and made us think about what is called de-globalization. Of course, it was also the Green Deal, which was to become the impetus for the controlled transformation of the European economy and way of life, but now, in my opinion, it is above all an aggravated situation due to the war in Ukraine. The economy has not yet fully recovered from the coid and is already facing the problem of extreme energy prices (perhaps even food), abandonment of the Russian market and further severing of ties resulting business.
How do you assess the state of the Czech economy compared to last year? How is the Czech economy doing in 2022?
The Czech economy has been quite prosperous until 2022 – and a few weeks ago I would say that its main problem this year will be (insufficient) components for the car market and high energy prices, resulting, between others, of the “green efforts” of the EU “. However, the Russian invasion of Ukraine has put into perspective and obscured any positive perspective. Some manufacturers are starting to face shortages in subcontracting, others are looking new markets after the restrictions are in place, and we will all have to deal with record prices for energy and certain raw materials.
You recently mentioned that itin the Czech Republic grow almost everything, for some items in comparison with other countries surprisingly fast. Especially when it comes to clothing and footwear on the rise, the Czech Republic has been in the Union for many months now, with a huge lead, an essentially infamous “premium”. At the same time, actual clothing and footwear sales remain well below the precautionary normal. Why does this happen?
One could probably just blame the problem on a weakening corona during a pandemic or expensive transportation from Asia, but that would only be a small part of the truth, as some other countries in the union were also struggling with this. Obviously, the problem of rapidly rising prices for clothes and shoes is a bit more complicated. This may be due to the effort to make up for lost sales during the lockdown, or to merchants’ reliance on lower price sensitivity from customers, who have previously shown they can switch from brick-and-mortar to online stores fairly quickly. line, not only domestic but also foreign.
The current wave of inflation has apparently become an opportunity for some retailers to improve their margins due to weak consumer demand based on retail sales over the past six months.. So what is the real essence of the current wave of inflation?
I agree – as I stated above – for some resellers this is more of an opportunity to improve margins. However, the wave of inflation that we have been following since the fall mainly reflects the increase in commodity and energy prices on the market and the still high prices of international shipping. Last year we had the opportunity to see the first wave of inflation in industry, and now households are starting to feel it quite hard. It can be argued that behind the current inflation there is the massive money printing carried out by the big central banks for years, Germany’s energy policy, the increase in emission quotas or, for example, a combination of low supply at a time of picking up demand. Undoubtedly, all these reasons will be relevant.
The prices of energy, housing, transport and foodstuffs are rising sharply. Will households and entrepreneurs still be able to cope?
They are basic necessities of life, so households do not have much choice. In the case of housing, this will not “only” be expensive energy, but also significantly more expensive apartment maintenance or higher mortgage payments. The more people pay for housing, food and transportation, the less they will have left to buy more goods and services. Consequently, tourism or retailers of household equipment and leisure goods and services risk being confronted with an unpleasant surprise.
Is it possible to correct inflation now and in the future so that it does not escalate into hyperinflation or other negative effects? How? ‘Or’ What?
Inflation, which mainly results from high commodity and energy prices, can only be controlled mainly by the CNB preventing the krona from further weakening. It has been clear since last May that there is no exaggerated shopping boom, so there is no need for an extreme economic cooling. Our inflation is largely decided on foreign markets. Of course, part of this stems from the response to previous lockdowns, which have plagued the management of businesses in tourism in particular.
Are Czech banks and the Czech economy strong enough to survive this turbulent period without major problems?
Domestic banks’ capital adequacy and liquidity are also respectable on a European scale, so I’m not worried about the domestic banking sector or the economy as a whole. In addition, the central bank’s very strict stress tests, which regularly confirm the resilience of the Czech banking sector, are having a positive effect. I’m a bit of a stretch to say that anyone who survived 2008 and what followed will survive everything.
Is the Czech Republic still interesting for foreign investors?
The Czech Republic is constantly attractive for foreign investors, especially because of the interest rate differential. It is still a country with a deep industrial tradition, a reliable and relatively cheap labor force, an excellent geographical position, etc. Of course, from a national perspective, we still see a lot of room for improvement, whether in education, legislation, including taxes, or infrastructure. In any case, the sooner we realize and eliminate our own shortcomings, the more attractive we will be for investors in the future.
Thanks for the interview.
Photo: Provided by Petr Dufek
Source: Renata Luckova