Tue, February 07, 2023

Companies in Central Europe Are Struggling to Solve Issues

European stocks and Ukraine

Companies across central Europe are trying to adapt to the ever-changing environment. Let’s take for example Czech foundry Benes. The company has seen its energy bill double in 2021 and its finance director is racing to get client contracts rewritten so it can pass on some of the burdens.

Thousands of companies across Central Europe are grappling with soaring costs for everything from parts to energy and growing wage demands.

Companies have to increase their prices in order to pay for various expenses. However, there is another serious issue, inflation. So, where companies are successful in sharing pain with their customers, this feeds into consumer inflation. It also adds to a price spike in Central Europe that has been stronger than anywhere else on the continent.

Central Europe and important factors 

Companies from Central Europe ended 2021 on a bullish note with business sentiment improving, while consumer demand stayed solid.

Central Europe is facing the same inflationary pressures as other parts of Europe. Still, it is battling strong wage growth with unemployment rates among the lowest in the EU.

A survey conducted by the Hungarian GKI Institute in December contains interesting details. For instance, small- and medium-sized businesses expect on average a 15% rise in costs in 2022. In Hungary, carmaker Suzuki is trying to adjust to the new reality. It is also passing some of its higher costs onto customers. 

A Czech Industry Confederation survey revealed one very interesting detail. The survey found that one in five firms expected to raise prices by at least 10%.

This month, Czech dairy group Madeta raised prices on its products by 10% or more. Last year, producer prices grew at their fastest pace since 1995 in the Czech Republic. According to capital economists, inflation is likely to remain high or fall back toward targets more slowly than expected in the Czech Republic, Poland, and Hungary. 

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