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Business Environment Index Deteriorates in 3rd Quarter
Thursday 26 November 2009 Zoom in | Print page
Bratislava, November 26 (TASR) - The Business Environment Index (IPP) in the third quarter of 2009 came in at 101.4 points, representing a drop of 3.49 percent and showed deterioration, it was revealed on Thursday.
"This is the 13th consecutive fall in the IPP," said Matej Tunega, analyst with Slovak Business Alliance (PAS) which prepares the indicator based on its survey.
He blames the deterioration in business conditions on the persisting crisis and government's inadequate activities against the crisis and barriers to enterprise.
The third quarter of 2009, according to members of PAS, saw the biggest decline in the (perceived) enforceability of the law and performance of the judiciary, falling by 10.27 percent to 32.7.
"State management efficiency and the availability of state aid recorded the second largest drop, down 9.31 percent to 42.0," said Tunega. In this indicator, entrepreneurs are looking at the efficiency and even-handedness employed in the distribution of state aid to private businesses. Despite adverse effects of the crisis on tax income in the state budget, government is not reducing expenditures in all ministries.
"This inaction, together with the planned record-high deficit for the budget for 2010, means significant growth in state debt, which eventually leads to a fall in credibility of the state as well as plans to put up taxes," said Tumega.
Even-handedness saw the third largest fall - down 8.62 percent to a reading of 47.8.
"Entrepreneurs are also hard-pressed about the poor payment discipline of their business partners. Availability of financial resources has also deteriorated, with these indicators slightly worsening since the middle of last year and since the outset of 2009 registering significant slumps," said the PAS analyst.
On the other hand, entrepreneurs gave the best rating to stability and predictability in the exchange rate as well as better ability in the projections of foreign trade revenues. The second best rated indicator was quality and availability of manufacturing inputs and labour force, whose rating rose as a result of lay-offs which have resulted in a higher supply of qualified labour on the market. Price stability is the third best rated indicator, with the rating increase influenced by low inflation.
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