On 19 January 2021 the Czech Parliament passed a new act that aims to strengthen the control of foreign direct investments in the Czech Republic (the "FDI Act"). The FDI Act has been introduced as a result of the new EU framework for the screening of foreign direct investments, which was adopted on 10 April 2019 and which applies from 11 October 2020. The FDI Act will have a significant impact on many strategic investments from non-EU countries. Rigorous and potentially retroactive screening of investments may deter potential non-EU investors from considering the Czech Republic as an investment target. The Ministry of Industry and Trade will be in a position to hit the brakes on in-scope transactions made by non-EU investors.

The FDI Act will become effective on 1 May 2021.

January retail sales fell more than expected in January given tighter pandemic restrictions, which were partially eased in December. The year-on-year rate showed a drop of 9.5% or -6.5% if adjusted for working days. Given the unfavourable pandemic situation, 1Q figures will remain weak

Inflation slowed in February due to stagnant food prices but also due to a core component that does not include food prices. On the other hand, fuels prices became more expensive. The base effect will increase the annual inflation rate in the coming months. We still expect the CNB to raise rates in the last quarter of this year.

Under the recently introduced decree of the Czech Ministry of Health (the “Decree”), employers must test their employees for COVID-19, as we informed you here.