Czechs hope wealth-destroying floods can lift growth

Michael Winfrey in Reuters: Floods that have caused billions of euros in damage across central Europe may actually provide an economic boost for the Czech Republic, a country struggling to shrug off its longest recession in more than two decades.

Governments and insurers from Germany to Romania will have to pick up the costs of helping families and business recover from the floods, which have killed at least a dozen people and driven hundreds of thousands from their homes since the start of June.

But central bank Governor Miroslav Singer cautioned against confusing gross domestic product (GDP) growth with wealth. "The repair of flood damage will probably result in an acceleration of the tempo of GDP," he predicted in a presentation last week, adding: "This variable measures economic activity, or the creation of new value each year; GDP does not measure wealth!"

The rising waters have forced factories to halt production and snarled logistics, cutting into output, while sludge dredged up from river bottoms has wiped out crops in low-lying areas in the Czech Republic and elsewhere.

Those factors, however, could be outweighed - if only just - by the funds will governments pump into rebuilding infrastructure and the cash families and firms will spend on replacing lost or damaged items....

Flood in Prague 2013, Štvanice water-power plant. Shot by Jiří Sedláček, Wikimedia Commons, under the Creative Commons Attribution-Share Alike 3.0 Unported license