Czech economy to expand by 2.2 pct this year - Ernst Young


27.02.2014 16:52

Prague - Czech economy will grow 2.2 percent in the current year and will expand by roughly 3 percent in the years to come, Ernst & Young (E&Y) said in a press release today.


Strojírny Wikov MGI, výroba - ilustrační foto ČTK Taneček David

Recovery in the euro zone and the crown´s weakening after forex interventions, launched by the central bank last November, will help the economy, Ernst & Young said.

"We believe the (Czech National Bank) CNB´s action aimed to keep the crown near Kc27 per euro will help Czech exporters, who will be doing better on the key foreign markets," said Jan Fanta, a leading partner of corporate consulting and risk management of E&Y in the Czech Republic.

"Stronger export will be mildly stimulating domestic demand as companies will be raising capacities and will need new workers as a result of which the Czech economy might achieve an annual rise of around 3 percent from 2015 to 2017," Fanta said.

E&Y´s estimate reckons with an average inflation rate of 1.7 percent this year irrespective of the recently announced decrease of regulated prices.

"Real interest rates will fall, which should motivate firms and households to raise investment and spending," said Fanta.

He pointed out that the CNB will apparently not exit the intervention regime before the start of 2015. The date is in line with the central bank´s forecast.

In the February forecast, the CNB said it expects a gross domestic product (GDP) growth of 2.2 percent this year and 2.8 percent expansion next year.

The Finance Ministry predicted a 1.4 percent GDP rise for this year and a growth of 2 percent for the year 2015.

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