Czechia

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At the start of 2023, the Czech economy continues to face strong pressure from high borrowing costs and double-digit inflation, though a slowdown in price growth appears to be around the corner. The deterioration in real wages is taking its toll on household consumption; this, combined with gross fixed capital formation, will act as the main drag on growth in 2023. By contrast, industry is coping better than expected with the headwinds: the automotive sector is particularly strong and is contributing positively to Czechia’s exports. Still, many of the challenges from 2022 will carry over into the first half of this year; consequently, the Czech economy is expected to report close to no growth (0.4%) in 2023, followed by a modest rebound (2.4%) in 2024. In the wake of pressure from firms struggling with soaring energy prices, the government has extended its support package to cover large enterprises (alongside SMEs and households); this will limit the scope for fiscal consolidation. Inflation will return to the Czech National Bank’s target range only in 2024. The policy rate will most likely remain stable at 7% over the coming months, before gradually decreasing towards the end of the year.
        FORECAST*
Main Economic Indicators202020212022202320242025
Population, 1000 persons1069810506....
GDP, real change in %-5.53.62.00.42.42.7
GDP per capita (EUR at PPP)2805029710....
Gross industrial production, real change in %-7.26.9....
Unemployment rate - LFS, in %, average2.62.82.53.02.82.6
Average gross monthly wages, EUR13671478....
Consumer prices, % p.a.3.33.314.89.04.03.0
Fiscal balance in % of GDP-5.8-5.1-4.7-4.0-2.5-1.9
Public debt in % of GDP37.742.0....
Current account in % of GDP2.0-0.9-2.6-3.8-2.6-0.9
FDI inflow, EUR m73676491....
Gross external debt in % of GDP76.375.5....


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. 1/2023

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Nina Vujanović, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 1, January 2023
44 pages including 4 Tables and 16 Figures

Details

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Executive summary

Branimir Jovanović
in: Bracing for the Winter
wiiw Forecast Report No. Autumn 2022, October 2022 , pp. I-VIII
Details


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