CFA/OVB Forecasting Dinner Survey 2012

Conducted in: 2012

The survey was conducted on the occasion of the 10th annual Forecasting Dinner 2012, which is organized regularly by the Czech CFA Society, an association of certified financial analysts. The dinner brings together renowned domestic and foreign economists and focuses its discussion on forecasting the economic development in the near future. This year’s 10th annual Dinner is taking place again under the auspices of Miroslav Singer, Governor of the Czech National Bank.

The Czech CFA Society and its general partner, the financial consultancy firm OVB Allfinanz, commissioned the survey from Donath Business & Media, in cooperation with Factum Invenio, and it was conducted from January 20 to 31, 2011. The object of the survey was to map the opinions of economic and financial experts concerning key economic issues of the day, specifically with regard to appropriate corporate strategies in a period of reduced economic activity and with regard to investment recommendations for Czech households. 

Invitations to take part in the survey were extended to

  • Members of the Czech CFA Society;
  • CFA Programme Candidates;
  • Senior staff of OVB Allfinanz;
  • Renowned figures of the Czech business and financial circles;
  • Readers of the political/economic bulletin FS Final Word.

The questions related to:

  • Expected developments of key parameters of the Czech economy and the Eurozone in 2012;
  • Recommendations for the government in relation to the budget deficit and the competitiveness of the country.
  • Corporate strategies in 2012;
  • Investment recommendations for individuals;

Of the total of 7,682 invited individuals, 1,977 responded (a response rate of 26%). The opinions of the respondents concerning individual questions are described below.

Key findings

Respondents believe that the Eurozone will survive another year. About every second expert polled believes that the Eurozone will retain its existing size. However, more than one-third of respondents believe the weakest economies will leave the euro.

Respondents are split on the likely direction of the rate of Czech crown vs. the euro. Two-fifths of them foresee a stable crown rate, a quarter of them expect some strengthening, and a quarter expect some weakening of the crown. Nevertheless, nine out of ten respondents believe that the crown is likely to stay within a 10% fluctuation zone.

What kind of measures are suggested for the coming period?

To stay within the planned budget deficit over the next three years, the revenue side will need to see higher taxation of the upper-income groups, as well as a higher VAT. Respondents would reduce expenditures specifically on social benefits and pensions, though less corruption and a more efficient government administration could also generate savings.

Increases in competitiveness, the experts believe, are clearly dependent on support for small and medium-size businesses. In terms of research and education, they see support for applied research and training in engineering and the natural sciences as being the most cost-effective. Support for infrastructure development is also an important factor. 

Corporate strategies for the coming period of reduced economic activity 

Businesses should in general focus on measures in the area of sales (especially by looking for new markets, market segments, and product opportunities), including channels of distribution (i.e. strengthening and broadening them), and on optimization of their human-resources capabilities (through adjustment of existing job descriptions).

Recommendations for increasing the value of individual investments

The experts recommend splitting a six-year investment of CZK 500,000 into three or four parts.

A conservative investor should keep about one-fourth of the amount in a time deposit. Other important types of investment include the purchase of real estate, of bonds traded on the Czech exchange, or of units in Czech mutual funds.

An investor willing to take a degree of risk should look at stocks, preferably those with high growth potential (and zero dividend), and invest into business ventures and mutual funds in the Czech Republic.

Kontakt: Tomáš Jelínek

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