Czechia
With quite stable employment and wage levels, the labour market shows little sign of change. An upturn in inflation, driven primarily by energy prices, has already led to a tightening of monetary policy, with the policy rate rising from 0.25% to 0.5%. Inflation will be contained (at about 2.5% in 2021). But the interest rate hike may have negative consequences for the exchange rate, foreign trade and real activity. Recent data suggest double-digit growth rates for sales and orders, especially for exports. Industry (and exports) may be set to lead the recovery over the rest of the year, with GDP likely to grow by about 3% in 2021. Fiscal policy will continue to be supportive.
| FORECAST* | ||||||
|---|---|---|---|---|---|---|
| Main Economic Indicators | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
| Population, 1000 persons | 10630 | 10672 | 10698 | . | . | . |
| GDP, real change in % | 3.2 | 3.0 | -5.8 | 3.0 | 3.9 | 3.3 |
| GDP per capita (EUR at PPP) | 27900 | 29100 | 28090 | . | . | . |
| Gross industrial production, real change in % | 3.1 | -0.3 | -7.2 | . | . | . |
| Unemployment rate - LFS, in %, average | 2.2 | 2.0 | 2.6 | 3.2 | 3.2 | 2.9 |
| Average gross monthly wages, EUR | 1250 | 1347 | 1348 | . | . | . |
| Consumer prices, % p.a. | 2.0 | 2.6 | 3.3 | 2.5 | 2.2 | 2.0 |
| Fiscal balance in % of GDP | 0.9 | 0.3 | -6.1 | -6.5 | -4.5 | -3.0 |
| Public debt in % of GDP | 32.1 | 30.0 | 37.8 | . | . | . |
| Current account in % of GDP | 0.5 | 0.3 | 3.6 | 2.2 | 2.0 | 1.5 |
| FDI inflow, EUR m | 7129 | 9582 | 5539 | . | . | . |
| Gross external debt in % of GDP | 81.3 | 76.5 | 76.1 | . | . | . |
Basic data are continuously updated.
* Forecasts are changed beginning of April, July and November.
See Press Conferences.
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Monthly Report No. 7-8/2021
Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanovic, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Leon Podkaminer, Sandor Richter, Bernd Christoph Ströhm and Maryna Tverdostup
wiiw Monthly Report No. 7-8, July-August 2021
42 pages including 4 Tables and 15 Figures
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CZECHIA: Light at the end of the tunnel?
Leon Podkaminer
in: Darkest before the dawn?
wiiw Forecast Report No. Spring 2021, April 2021 , pp. 64-67
Details and Buy
GDP decline during Q1 2021 (-2.4%) was greater than generally expected. This was due to the continuing contraction in gross fixed capital formation and household consumption, and occurred despite the high growth in inventories. Gross value added (GVA) in manufacturing recorded a 1.7% growth, but there was quite a substantial GVA decline in construction (7.6%). Rather unexpectedly, the growth in imports was much stronger than in exports, suggesting increased replenishment of stocks of intermediate inputs. The result was that foreign trade contributed negatively to overall growth. With quite stable employment and wage levels, the labour market shows little sign of change. An upturn in inflation, driven primarily by energy prices, has already led to a tightening of monetary policy, with the policy rate rising from 0.25% to 0.5%. Inflation will be contained (at about 2.5% in 2021). But the interest rate hike may have negative consequences for the exchange rate, foreign trade and real activity. Recent data suggest double-digit growth rates for sales and orders, especially for exports. Industry (and exports) may be set to lead the recovery over the rest of the year, with GDP likely to grow by about 3% in 2021. Fiscal policy will continue to be supportive.