OECD raises Czech growth expectations, says risks are balanced

By bne IntelliNews November 25, 2014

After exiting a record-long recession in 2013, the Czech economy is gaining speed with recovery driven by strengthening domestic demand that offsets weakness in export markets, the Organisation for Economic Cooperatixpon and Development (OECD) said in its latest Economic Outlook published on November 25. OECD now expects the Czech GDP to rise by 2.4% in 2014, improving its estimate from 1.2% forecast in May. Next year’s growth outlook, on the other hand, was slightly cut to 2.3% from 2.4%.

Supportive financial conditions, government spending, improving confidence and rising incomes will support growth in the near term, the OECD said adding that a recovery in private investment should also be well under way by 2016 helping the economy expand by 2.7%.

As growth strengthens, inflationary pressures will rise pushing the central bank to end its weak-koruna regime allowing the exchange rate for float freely and return using policy rates as its main instrument. Inflation is seen getting closer to the central bank’s target of 2% in 2016.

Risks to the Czech economy are broadly balanced. External risks include further escalation of the Russia-Ukraine conflict that may dent private sector confidence, while an unexpected weakness in the euro area might hit exports. Another downside risks is a repeat of low absorption of EU funds, while on the upside a further rise in confidence might lead to a faster-than-expected recovery in private demand.

OECD's forecast for the Czech Republic      
  Current forecast Previous forecast
  2014 2015 2016 2014 2015
GDP y/y change, % 2,4 2,3 2,7 1,2 2,4
Private consumption, y/y change % 1,5 1,9 2,3 0,9 1,7
Govt consumption, y/y change % 1,6 2,1 1,7 1,1 2,0
Gross fixed capital formation, y/y change % 4,5 4 3,4 0,4 3,2
Final domestic demand 2,3 2,5 2,5 0,9 2,1
Exports, y/y change % 8,3 4,8 6,3 5,0 5,4
Imports, y/y change % 8,9 5,2 6,3 4,6 5,3
Inflation, % 0,3 1,1 1,8 0,1 2,0
Unemployment, % 6,3 6,2 6 6,9 6,8
Current account balance, % of GDP -0,1 0,1 0,2 -0,6 -0,3
General govt balance, % of GDP -1,4 -2,1 -1,5 -2,1 -2,6
General govt gross debt % of GDP 51,9 52,4 52,2 58,8 60,9
Source: OECD's November 2014 Economic Outlook

Related Articles

US Steel reportedly nearing sale of Slovak steel mill to Chinese suitor

US Steel is pursuing talks over the sale of its plant in Kosice with a Chinese suitor, having rejected the interest of a potential Czech bidder, local media claimed on January 24. Speculation that ... more

Czech CPI buys huge Central European retail portfolio

Czech real estate investor CPI Group has bought a large portfolio of Central European retail assets, local media reported on January 17. The investor, which has grown its holdings rapidly since ... more

CEZ ignores Czech finance minister and re-elects CEO

The supervisory board at Czech power group CEZ ignored pressure from the finance ministry to dump the current management, local media report. Finance Minister Andrej Babis has been accumulating ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss