Czech Republic Economic Forecast

Czech Rep. Economic Outlook

October 30, 2018

The economy appeared to shift into higher gear in the third quarter, following relatively timid growth in the first half of the year weighed on by a disappointing performance of the external sector. Although industrial output cooled markedly in August from the double-digit annual growth logged in July, largely due to a contraction in vehicle manufacturing, it is likely that Q3’s average growth will exceed that of H1—hinting at more positive operating conditions of the secondary sector. Similarly, on the demand side, retail sales slowed in August from an over one-year high expansion in July; nevertheless, the two-month average remained well above that logged in H1. This, alongside historically-low unemployment, over-decade high wage growth and consumer confidence at near-record highs point to strong private consumption in the third quarter. The latest survey-based data has also been upbeat, with business confidence remaining elevated and consumers turning more optimistic in October, providing an early indication that robust momentum continued into the fourth quarter.

Czech Republic Economic Growth

Growth is expected to moderate next year although it should remain strong as healthy household spending, buttressed by brisk wage gains and a labor market approaching full employment, underpins the expansion. In addition, planned fiscal stimulus, which includes increases in public-sector salaries and pensions as well as an infrastructure investment push, will lend further support to economic activity. The main downside risk to the outlook stems from escalating global trade conflicts, which could impact the country’s export-oriented industrial base. Met the why particular Consensus Forecast panelists see GDP growing 3.0% in 2019, which is unchanged from last month’s projection, and 2.6% in 2020.

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Czech Republic Facts

Bond Yield2.11-1.85 %Nov 15
Exchange Rate22.99-0.66 %Nov 15
Stock Market1,081-0.11 %Nov 15

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