Czechia

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The Czech economy grew by 0.2% year on year in Q1 2024 , with household consumption and external demand contributing most significantly. Real wages finally grew for the first time since Q3 2021, providing a much-needed boost to consumer spending for the period ahead. The recovering purchasing power is visible in the dynamic growth of retail sales (5.3% year on year in April), along with improvements in consumer confidence indicators. While inflation fell sharply in the first months of the year and remains reasonably low, the Harmonised Index of Consumer Prices (HICP) again jumped in April, pointing to a likely moderation of disinflationary trends in the future. At the same time, due to the ripple effect of the struggling German economy, Czech industrial production remains stagnant, with no sign of any major improvement on the horizon. Nonetheless, trade in goods has been buoyant, with the growth of exports outpacing that of imports. The strong export performance, especially in motor vehicles, is likely a lagged reflection of last year’s robust industrial production in the sector; but given the current slowdown in production, a partial loss of this momentum is to be expected. All in all, recent developments mostly confirm our previous expectations from the spring forecast – the Czech economy is on track for modest growth this year (1.2%), supported primarily by private consumption; this will be followed by a more extensive revival in subsequent years. On the monetary side, persistent pro-inflationary pressures justify an upward revision of the HICP for 2024 (2.4%; +0.4 percentage points), and a somewhat more conservative progression of the monetary easing cycle by the Czech National Bank, possibly landing at 4.5% at the year-end.
        FORECAST*
Main Economic Indicators202120222023202420252026
Population, 1000 persons105061067210850...
GDP, real change in %3.62.4-0.31.22.52.7
GDP per capita (EUR at PPP)299903204034190...
Gross industrial production, real change in %6.82.1-1.3...
Unemployment rate - LFS, in %, average2.82.22.63.02.62.6
Average gross monthly wages, EUR149316251796...
Consumer prices, % p.a.3.314.812.02.42.22.2
Fiscal balance in % of GDP-5.1-3.2-3.7-2.5-2.0-1.5
Public debt in % of GDP42.044.244.0...
Current account in % of GDP-2.8-4.90.40.40.81.4
FDI inflow, EUR m1095387297620...
Gross external debt in % of GDP76.367.461.1...


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. 7-8/2024

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Meryem Gökten, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2024
45 pages including 5 Tables and 12 Figures

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Executive summary

Olga Pindyuk
in: The Crisis is Over, but its Scarring Effects are Hindering Recovery
wiiw Forecast Report No. Spring 2024, April 2024 , pp. I-VII
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