Czechia

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The Czech economy performed relatively well in Q1 2022, expanding by 4.8% in annual terms. Household consumption and gross fixed capital formation were the main drivers of this, contributing 3.4 percentage points and 3.1 percentage points, respectively. A similar pace of growth is unlikely to be maintained over the rest of the year, however, as the pandemic-related base effects subside, households become more prudent in their spending, and the impact of the ongoing war in Ukraine is fully reflected in the numbers. Inflation is anticipated to remain high for much of the year and, following a substantial revision upward, is now expected to be in double-digit territory in 2022. Amidst falling real incomes, consumer confidence has hit a 10-year low, denting the ability of household consumption to contribute to growth. At the same time, recovery from the supply-chain shock, further intensified by the war, is apparently going to take longer than anticipated. This will hurt export-oriented industrial economies like Czechia, where net exports will inevitably put a damper on growth. Industrial production already recorded a year-on-year decline of 3.8% in April, partially explained by the strong post-lockdown revival last year. On the other hand, the service sector is driving optimism, as life returns to ‘normal’ and pandemic concerns are packed away. Yet, as consumers tighten their belts, the revival could prove short lived. Given the rather strong and persistent headwinds, the outlook for Czechia has been revised downward, with real GDP expected to grow only modestly, by 1.8% in 2022, and with downside risks dominating.
        FORECAST*
Main Economic Indicators201920202021202220232024
Population, 1000 persons106721069810506...
GDP, real change in %3.0-5.53.51.82.93.7
GDP per capita (EUR at PPP)291602787029500...
Gross industrial production, real change in %-0.3-7.26.9...
Unemployment rate - LFS, in %, average2.02.62.82.52.52.2
Average gross monthly wages, EUR134713671478...
Consumer prices, % p.a.2.63.33.312.25.82.3
Fiscal balance in % of GDP0.3-5.8-5.9-5.0-2.7-0.5
Public debt in % of GDP30.037.642.0...
Current account in % of GDP0.32.0-0.9-3.5-2.20.0
FDI inflow, EUR m958273676491...
Gross external debt in % of GDP76.576.375.5...


Basic data are continuously updated.

* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.

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Monthly Report No. 7-8/2022

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Bernhard Moshammer, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Nina Vujanović, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2022
58 pages including 4 Tables and 21 Figures

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CZECHIA: Mounting challenges depress otherwise solid growth prospects

Zuzana Zavarská
in: Overshadowed by War and Sanctions
wiiw Forecast Report No. Spring 2022, April 2022 , pp. 57-60
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