Czech Republic Economic Forecast

Czech Rep. Economic Outlook

January 14, 2020

The economy shifted into a lower gear in Q3 2019 amid ebbing domestic demand. Notably, capital spending contracted for the first time in two-and-a-half years amid a sharp decline in machinery and equipment investment. For its part, household spending remained the engine of growth but weakened, expanding at the softest pace in half a decade amid slower wage gains. Meanwhile, although net trade contributed positively again to the upturn, this was mainly due to waning imports. Turning to Q4, available figures point to a further slowdown in momentum. Industrial production contracted for the fourth consecutive month in November amid a struggling automotive sector, while the manufacturing PMI and business confidence deteriorated further in Q4. On the fiscal front, the Finance Ministry reported on 3 January that the state budget ended 2019 with a narrower deficit than initially anticipated. That said, it was the largest in four years as economic activity slowed and public spending rose.

Czech Republic Economic Growth

Economic growth is expected to ease this year largely due to weaker domestic demand. Private consumption is poised to lose some traction, but will remain solid overall amid the tight job market and still-strong wage growth. Continued EU funds inflows should also lend support to public investment. Subdued industrial sentiment and global trade uncertainties cloud the outlook. FocusEconomics analysts expect growth of 2.3% in 2020, which is unchanged from last month’s forecast, and 2.4% in 2021.

Czech Republic Economy Data

2014 2015 2016 2017 2018
Population (million)10.510.510.510.610.6
GDP per capita (EUR)14,93214,85416,00816,70818,164
GDP (EUR bn)157156169176192
Economic Growth (GDP, annual variation in %)-0.52.75.42.44.5
Consumption (annual variation in %)0.51.83.83.54.4
Investment (annual variation in %)-2.53.910.3-3.24.0
Industrial Production (annual variation in %)-0.15.04.33.46.5
Retail Sales (annual variation in %)0.02.95.75.25.5
Unemployment Rate7.06.15.13.92.9
Fiscal Balance (% of GDP)-1.2-2.1-0.60.71.6
Public Debt (% of GDP)44.942.240.036.834.7
Money (annual variation in %)5.06.68.46.68.6
Inflation Rate (CPI, annual variation in %, eop)1.40.10.02.02.4
Inflation Rate (HICP, annual variation in %, eop)1.50.1-0.12.12.3
Inflation (PPI, annual variation in %)1.7-3.7-2.9-0.30.7
Policy Interest Rate (%)0.050.050.050.050.50
Stock Market (annual variation in %)-4.8-4.31.0-3.617.0
Exchange Rate (vs EUR)27.4327.7327.0327.0225.54
Exchange Rate (vs EUR, aop)25.9927.5327.2827.0326.33
Current Account (% of GDP)-0.50.20.21.61.4
Current Account Balance (EUR bn)-0.80.30.42.73.0
Trade Balance (EUR billion)6.58.06.99.19.8
Exports (EUR billion)103110116118129
Imports (EUR billion)96.7102109109119
Exports (annual variation in %)-1.37.14.72.19.4
Imports (annual variation in %)-2.96.06.10.29.6
International Reserves (EUR)40.845.059.481.3123
External Debt (% of GDP)63.568.368.673.389.0

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Czech Republic Facts

Value Change Date
Bond Yield1.64-1.85 %Dec 31
Exchange Rate22.76-0.66 %Dec 30

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