Czech c-bank cuts 2013 GDP forecast, improves outlook for 2014, 2015.

By bne IntelliNews February 7, 2014

In a new forecast published on February 6, the Czech central bank cut its estimate for last year’s economic development but improved expectations for 2014 and 2015 thanks to recovering foreign demand. The bank expects the economy to contract by 1.3% in 2013, deeper than a 0.9% drop forecast in November. This year, however, the GDP should grow by 2.2% the bank said raising its forecast from an earlier expected growth of 2.1%. Growth is forecast to speed up further to 2.8% in 2015, versus a previous forecast of 2.5%.

Economic recovery in 2014 will also be supported the monetary policy easing via the bank’s currency interventions. The weaker koruna will boost the price competitiveness of domestic production and, via a decrease in real interest rates, support private consumption and investment expenditure. Unlike in previous years, fiscal policy will have a broadly neutral effect on economic growth, the bank said.

The forecast assumes market interest rates to stay at their very low level until the start of 2015 by then the easier monetary conditions will allow the bank to return to the conventional regime of its monetary policy in which rates will again play the main role.

Still subdued domestic activity and low wage growth coupled with a fall in administered prices will push the headline inflation to low positive levels at the start of 2014. Inflation will then pick up pace, returning towards the bank’s target of 2% at the end of this year.

Related Articles

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

Czech-based CME divests Croatian Nova TV and Slovenian Pop TV for €230mn

Czech Republic-based broadcaster Central European Media Enterprises (CME) on July 10 announced the divestiture of its leading Croatian and Slovenian TV stations to United Group's Slovenia Broadband ... more

Central European and Baltic economies shrugging off political uncertainty

Medium-term economic growth forecasts for Central Europe and the Baltics have been raised by The Vienna Institute for International Economic Studies (wiiw) in a report issued on June 29. The most ... more

Dismiss