INSIGHT: Czech Republic and Poland battle with coronavirus second wave

LONDON (ICIS)–The Czech Republic has been through a torrid October facing up to the fact that while it was one of Europe’s best performers in battling the first wave of the pandemic, it has sunk to almost the bottom of the league in addressing the second wave.

The country by last week was recording the second-highest per capita weekly rate of infections in the EU, trailing only Belgium.

Announcing new restrictions, Czech Prime Minister Andrej Babis put a date on when his country’s health system would collapse if the new regulations were not imposed to slow the virus’s spread: between 7 and 11 November.

Thus far, the export-geared country – which according to ING is currently on track for an 8.5% decline in GDP this year, with the risks skewed to the downside – has stopped short of introducing a second lockdown. Industrial plants remain free to operate, albeit with a wary eye on coronavirus impacts, again driving down consumer demand for their products.

However, a curfew for all but essential reasons, such as work or medical emergencies, is now in effect from 9pm to 5am. Movement during the day is restricted to shopping, travelling to and from work, essential family trips and going to a park or the countryside. Schools and all non-essential shops are shuttered and face masks must be worn in indoor and most outdoor settings away from the home.

The restrictions appear to be delivering significant progress in addressing the resurgent outbreak, with the ‘R’ reproduction number for the virus at 1 by Monday 2 November compared to 1.5 in mid-October (if the number is above 1 then the disease is said to be increasing exponentially).

Reporting its third-quarter group results on 29 October, Poland’s PKN Orlen – which owns the Czech Unipetrol polyolefins producer – noted a 16% year on year decrease in petrochemical sales volumes in the Czech Republic “mainly as a result of lower demand from the automotive and construction sectors and the impact of maintenance shutdowns”.

Unipetrol spokesman Pavel Kaidl told ICIS news all the company’s plants were operating to plan, adding: “We have started to optimise costs, but our goal is to avoid layoffs.”

Kaidl also said: “We continuously measure body temperature at the entrance to the premises, and at the beginning of August we reintroduced the obligation to wear protective masks in all interiors of our production plants and office buildings. We distribute protective equipment and disinfection to employees. Where the job position allows, employees work from home.”

Czech GDP takes a clear hit from any substantial limiting of production in its automaking industry, with Volkswagen-owned Skoda, for instance, accounting for 9% of economic output.

The country is also vulnerable to the economic trajectory of Germany, to where it ships a huge amount of intermediate products.

Berlin this week imposed a one-month partial lockdown.

Whether the Czech government will resist building pressure for a winter lockdown in the Czech Republic remains an open question.

President of the Czech Medical Chamber, Milan Kubek, told Czech Radio-Radiozurnal this week that some 15,500 health professionals, including more than 2,900 doctors, were currently infected in the country and that a hard lockdown should be imposed because the hospitals were heading for a “disaster”.

“Mathematical models show that at the current rate of epidemic spread, the capacity of hospitals will be filled around 10 November,” he said. “Nobody knows what’s next. There’s no plan.”

He also warned that when hospitals are overwhelmed, they can’t treat comparatively benign conditions, such as appendicitis, “because there will be no beds or medical staff.”

Poland, meanwhile, on Thursday 29 October reported another daily record of coronavirus infections and deaths, with 20,156 new cases and 301 deaths related to COVID-19.

The Polish health ministry said the total number of confirmed coronavirus infections had tripled in less than a month, exceeding 300,000.

Like the Czech Republic, Poland is building field hospitals as beds fill up on wards.

Polish soldiers have also been mobilised to conduct Covid-19 testing.

Thursday also saw Poland’s Prime Minister Mateusz Morawiecki appeal to abortion rights activists to halt ongoing mass protests, saying they would fuel more coronavirus infections and threaten the elderly.

Tens of thousands of mostly young people have gathered across Poland since a top court ruling that brought in a near total ban on abortion in the predominantly Catholic nation.

The gatherings breach pandemic restrictions that limit the number of people permitted to meet to five.

Other restrictions brought in in Poland – likely to take a GDP hit of around 3.5% this year according to a Fitch Ratings forecast – have resulted in a two-week partial closure of schools, the restricting of restaurants to providing take-out food only and the closing of fitness clubs and swimming pools.

The government has also sent text messages to Poles, urging them to stay at home and help elderly people.

Weddings are banned and public transport numbers have been limited.

Orlen finds itself in a worrying fourth quarter, having described the third quarter as beset by “historically the most difficult macroeconomic environment for the refining industry”.

Third quarter petrochemical sales volumes in Poland were approximately flat year on year at 1.3m tonnes, the company said, but lower prices amid struggling economies meant petrochemicals operating profit fell 43% to zloty (Zl) 275m ($69.6m).

Grupa Azoty, the Polish chemicals and fertilizer major, said on Monday that it had started construction of a 150-bed field hospital for the treatment of Covid-19 patients in agreement with Poland’s Ministry of State Assets.

“The pandemic we are all having to deal with requires specific and quick actions,” said Mariusz Grab, acting CEO of Grupa Azoty, referring to the hospital’s construction.

The company said it has donated Polish zloty 3.2m ($1.3m) to fight the pandemic since it started in March.

Front page picture: A man walks on an empty street in Prague, 26 October
Source: Martin Divisek/EPA-EFE/Shutterstock

Insight by Will Conroy