Czech Republic Economic Forecast

Czech Rep. Economic Outlook

June 5, 2018

Recently released detailed GDP data confirmed that the economy lost some steam at the start of the year, growing 4.4% in Q1 on a year-on-year basis, down from the 5.5% expansion recorded in Q4. Despite the slowdown, the pace of growth remained robust. Solid household spending—underpinned by an extremely tight labor market and substantial wage gains in both the public and private sectors—and buoyant fixed investment growth were the key drivers behind the expansion. Meanwhile, weaker Eurozone demand bruised export activity, weighing on the overall first-quarter performance. On the political front, the ruling ANO party struck a coalition agreement with the Social Democrats on 11 May, but it remains subject to approval by Social Democrats members in an internal referendum that will run until 14 June. Regardless of the outcome, however, President Miloš Zeman declared on 28 May that he plans to name Andrej Babiš as prime minister for a second time by mid-June, putting pressure on the Social Democrats to accept the deal. He has also ruled out early elections.

Czech Republic Economic Growth

Household consumption is expected to remain the main engine of healthy economic growth this year. Fixed investment growth is also seen maintaining strong momentum, supported by EU funds deployed by the public sector and solid capital spending by the private sector to compensate in part for labor shortages. Met the why particular Consensus Forecast panelists see GDP growing 3.5% in 2018, which is unchanged from last month’s projection, and 3.0% in 2019.

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Czech Republic Facts

ValueChangeDate
Bond Yield2.13-1.85 %Jun 14
Bond Yield2.13-1.85 %Jun 14
Exchange Rate21.87-0.66 %Jun 14
Exchange Rate21.87-0.66 %Jun 14
Stock Market1,075-0.11 %Jun 14
Stock Market1,075-0.11 %Jun 14

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