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

Petr Kellner agrees to buy Skoda Transportation for reported €400mn

Petr Kellner, Central Europe’s richest man, has agreed to buy Skoda Transportation, the Czech manufacturer of electric trains, trams and ... more

CEFC and Penta reported to be bidding together for CME

CEFC, the acquisitive Chinese energy group, and Penta Investments, the closely-held Slovak financial group, are bidding together for Time Warner’s stake in Central European Media Enterprises (CME), ... more

Growing threat of pay clash at Czechia's Skoda Auto may be sign of things to come

The unions and management at Skoda Auto, the largest Czech automaker, seem on course for a big pay rise disagreement that may be part of an outbreak of such confrontations throughout industry in the ... more

Dismiss