Oxford Economics lowers Czech 2014 growth estimate to 2.4% on weaker-than-expected Q1 data

By bne IntelliNews May 22, 2014

The Czech economy should grow by 2.4% in 2014 recovering from a 0.9% drop in 2013, Oxford Economics said in a new forecast lowering its forecast from a 2.6% growth expected in March mainly due to weaker-than-expected Q1 data. According to the Czech statistics office flash estimate published on May 15, the GDP remained flat on the quarter in Q1 mainly due to the destocking of tobacco products. However, as this effect unwinds, Oxford Economics expects quarterly growth to accelerate in 2014 on the back of supportive fiscal policy, stronger foreign demand and the central bank’s currency interventions.

Regarding expectations for 2015, Oxford Economics kept unchanged its estimate of 2.8% saying that growth will continue to be underpinned by strengthening foreign demand, falling unemployment, improving credit conditions and a recovering construction sector.

A continued growth in the key manufacturing industry, evident from the rising PMI index, and improved consumer confidence should also support the country’s economic growth.

Oxford Economics evaluates two main emerging risks for the Czech economy. The first one is the uncertainty when the central bank will exit its exchange rate commitment meaning as a too sudden move might prompt a significant appreciation of the koruna against euro, hurting  GDP growth, while a too modest move might lead to higher inflation.

The second emerging risk may arise from a further deterioration of EU-Russia relations over the Ukraine’s crisis that may limit Czech exports to Russia. Also in case of disruptions of the Russian supply of gas and oil, the Czech Republic could experience weak growth this year and recession in 2015, accompanied by relatively high inflation.

In its risk assessment Oxford Economics said the Czech Republic remains vulnerable to a renewed downturn in the eurozone, which buys 63% of Czech exports. The country’s risk index is estimated at 19 on a scale from 0 (no risk) to 100 (highest risk).

  2013 2014 2015 2016 2017
GDP, y/y growth -0,9% 2,4% 2,8% 3,0% 2.9%
Domestic demand, y/y growth -0,7% 2,1% 2,7% 3,2% 3,2%
Exports, y/y growth 0,2% 5,1% 5,9% 5,6% 5.3%
Imports, y/y growth 0,6% 5,0% 6,1% 6,2% 5.9%
Consumer prices, y/y growth 1.4% 0,6% 1,9% 1.9% 2,0%
Govt budget, share of GDP -1,5% -2,3% -2,1% -1,9% -1,6%
Current account balance, share of GDP -1,4% -1,7% -1,8% -1,8% -1,6%
Source: Oxford Economics' May 2014 forecast

Related Articles

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

Japan’s Asahi buys a huge round in Central Europe

Asahi has beaten a host of regional heavyweights in the race to buy SABMiller’s Central and Eastern European beer brands, the Japanese brewer announced on December 13. The Asian giant said it ... more

Tension cools as EU approves Czech renewables support

The European Commission approved on November 28 the Czech Republic’s support scheme for renewable energy projects. The move should put several years of recurring uncertainty over the state payments ... 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