Czech Republic Economic Forecast

Czech Rep. Economic Outlook

September 3, 2019

The economy kept pace in the second quarter, underpinned by resilient domestic demand and an improvement in the external sector. Household and government spending sustained the domestic economy, amid a tight labor market, while fixed investment fell notably, hit by souring economic conditions in the EU. Turning to the third quarter, activity seems to be softening, as suggested by the manufacturing PMI sinking deeper into negative territory in July amid falling output and new orders, and sentiment in the industrial sector remaining at a near six-year low in August. In politics, President Milos Zeman appointed a new culture minister on 27 August, ending a dispute which could have caused the government to collapse. The resolution came after the Social Democrats, the junior coalition member in Prime Minister Andrej Babis’ minority government, proposed an alternative candidate for the post.

Czech Republic Economic Growth

The export-oriented economy is expected to lose steam this year as weakening EU demand, primarily from the key German industrial sector, and ongoing global trade conflicts weigh on the external sector. Solid household spending—buttressed by firm wage growth, upbeat consumer confidence and the tight labor market—should buffer the slowdown somewhat, however. FocusEconomics analysts expect growth of 2.6% in 2019, which is unchanged from last month’s forecast, and 2.4% in 2020.

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Czech Republic Facts

Bond Yield1.07-1.85 %Sep 04
Exchange Rate23.44-0.66 %Sep 04
Stock Market1,028-0.10 %Sep 04

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