published: 30.12.2013, 14:29 | updated: 30.12.2013 14:31:49
Prague - Czech economy will likely grow by over 2 percent next year following contraction over the past two years, analysts polled by CTK said today.
Global recovery and changes to the government´s budgetary policy are behind economic expansion next year.
The fiscal policy hindered economic development over cuts so far, analysts said.
In spite of the central bank´s interventions in the currency market, inflation will stay low at the start of next year due above all to falling energy prices and unemployment will stay above 7 percent over fading crisis, analysts said.
"The CNB´s forex interventions and rising foreign demand, also from euro zone countries, will significantly raise exports that will secure a stable growth rate to the Czech economy," said Jan Fanta, a partner with Ernst & Young.
Raiffeisenbank analyst Michal Brozka said this year saw another GDP contraction but it is a piece of good news that Europe and possibly also the Czech Republic have overcome the crisis.
"We expect that the main world economies will be rising next year. This is of key importance for the Czech economy. The Czech fiscal policy should no longer be slowing economic performance in a way seen in the past two years," said Brozka.
Komercni banka´s Jiri Skop pointed out that forex interventions launched by the central bank in November will be helping the economy in the second half of next year and will become fully visible in the year 2015.
Inflation will be lower than this year despite the crown´s marked depreciation because of lacking effect of higher VAT rates and of falling prices of electricity, said Patria Finance chief economist David Marek.
"If the central bank did not intervene (to weaken the currency), inflation might fall to zero next year," said Skop.
"We might even see annual falls in the first half of next year," he added.
The weaker crown will first raise import prices, that is prices of motor fuels, some food products and other non-durable goods. "The improved situation in real economy may then ensure that inflation will be hovering near the 2-percent inflation target of the CNB," Skop said.
Unemployment is the biggest problem, according to Next Finance analyst Vladimir Pikora.
"And improvement is nowhere to be seen," he said. "Statistics show clearly that unless the economy rises by over 3.5 percent in annual terms, it is not creating many long-term jobs," said Pikora.
Economic development in 2010 to 2012
|average rate of unemployment||7||6.7||6.8|
Source: CSU, Labour and Social Affairs Ministry (new method of unemployment calculation)
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