PRAGUE - MOST Czechs are shrugging off the global financial turmoil ahead of the fast-approaching Christmas shopping spree, but growing worries in the corporate sector suggest they should be on alert.

On Friday, statisticians said consumer confidence in the economy grew by 0.7 points in November against a month earlier, in stark contrast to a 6.6-point contraction in business confidence.

'Consumers should probably show some fear, but they haven't so far,' Next Finance analyst Marketa Sichtarova told wires agencies.

Instead, Czechs are filling shops, open seven days a week and often till late at night, in a chase for Christmas presents, ignoring the financial crisis that has forced employers throughout the former communist country to cut both production and jobs.

'Consumers still see real incomes grow, while companies are confronted with falling demand above all from abroad,' said Mr Sichtarova.

Poor demand in western Europe, a key market for Czech exporters, has forced Czech producers such as the country's largest car maker Skoda Auto to announce production cuts or, worse, job cuts affecting thousands of people.

The centre-right coalition cabinet has been taking the crisis in its stride so far, pointing to the healthy banking sector. But this week it said it was working on a rescue plan and planning to boost labour market flexibility.

Prime Minister Mirek Topolanek also said the cabinet would like to 'create room for low interest rates through fiscal and economic policies in order to boost investment and exports which are threatened the most by the cooldown'.

Over the past month, twenty-one companies have announced layoffs, planning to sack 9,000 people because of falling demand and as a step to prevent the impact of the looming crisis, the Hospodarske noviny daily wrote on Wednesday.

This Christmas will be especially sad for the 1,250 staff of Bohemian crystal maker Sklo Bohemia, which wound up a month ago, sacking whole families that had worked at the company for decades.

Czech unemployment may climb to 6.7 per cent in 2009 from 5.2 per cent in October this year because of the crisis, the CTK news agency wrote, citing analysts.

'The consumer sentiment will probably worsen with growing unemployment in January or February,' said Mr Sichtarova.

International organisations have revised their growth forecasts for the Czech Republic downwards, saying they expect a contraction this year and in 2009 after a record-high 6.6 per cent economic growth in 2007.

The International Monetary Fund expects the Czech economy to grow by less than 2.0 per cent in 2009, down sharply from a previous forecast of 4.0 per cent, while the European Commission predicts a slowdown to 3.6 per cent.

'We have to get used to slower economic growth and to a more difficult economic situation,' said Patria Finance analyst David Marek, adding 'companies will not raise wages next year, which is a clear result of the financial crisis'.

But the ordinary shopper seems careless as Christmas draws nearer. An average Czech is planning to spend about half of the average monthly wage (around S$1,740.87) on Christmas presents and delicacies, according to surveys by the TNS ANSA and Deloitte agencies.

One in three Czechs is planning to buy more presents than last year, a Deloitte survey has shown, and households will raise spending on Christmas by an average 0.4 per cent against 2007.

'Nobody will want to give up Christmas shopping because of some economic problems,' said Marek. -- AFP