Czech economy to fall by 1.2% in 2013, rise by 1.6% in 2014-poll

Budova Ministerstva financí České republiky v Letenské ulici v Praze.

published: 03.12.2013, 13:47 | updated: 03.12.2013 13:49:34

Prague - Czech gross domestic product (GDP) will contract by 1.2 percent on average this year and will grow by 1.6 percent next year, according to results of a regular Finance Ministry poll of 17 domestic institutions published today.

The year 2015 will see a rise of 2.5 percent and growth will further accelerate to 2.6 percent in 2016.

The Finance Ministry predicts a GDP drop of 1 percent this year and a 1.3 percent increase in 2014.

The Czech National Bank (CNB) estimates a 0.9 percent decrease for the current year and a 2.1 percent growth for next year, its estimate already taking into account interventions in the currency market.

The International Monetary Fund projects a fall of 0.4 percent in the current year and a growth of 1.5 percent next year.

In a November forecast, the European Commission predicted a 1 percent drop in 2013 and a 1.8 percent economic expansion in the following year.

Basic development tendencies envisaged by the Finance Ministry for 2013 to 2016 are consistent with forecasts of the other institutions, the ministry said.

"Development of the exchange rate Kc/EUR is an exception as forecasts of most of the institutions have already taken into consideration the forex interventions of the CNB," said the ministry.

The central bank launched the interventions early in November in an effort to keep the currency near Kc27 vis-a-vis the euro for at least one year and a half.

The institutions estimate the crown to trade near Kc26 per euro on average this year and in the following two years. Firming to Kc25.5/EUR is projected for 2016.

Before the interventions, the Finance Ministry put the crown´s rate at Kc25.80/EUR.

Inflation is estimated to stay low in the years ahead. Average inflation will be 1.4 percent this year, 1.3 percent next year, 2 percent in 2015 and 1.8 percent in the following year.

"Significant cuts in prices of electricity will be offsetting pro-inflation effects of the interventions against the crown," the ministry said.

Wage and salary growth will speed up from 0.6 percent this year to 1.9 percent in 2014.

Results of the ministry´s polls, performed twice a year since 1996, are based on forecasts of the Finance Ministry, Industry and Trade Ministry, Labour and Social Affairs Ministry, CNB, CERGE-EI, Citibank, Ceska sporitelna, CSOB, Generali PPF Asset Management, Economic Chamber, Institute of Economic Studies of the Faculty of Social Sciences at Charles University, Komercni banka, Liberal Institute, Patria Finance, Raiffeisenbank, Confederation of Industry and UniCredit Bank. The data also include estimates of the European Commission, International Monetary Fund and Organisation for Economic Co-operation and Development.

Results of selected indicators in Finance Ministry's poll:

20132014
minimumaveragemaximumminimumaveragemaximum
GDP-1.5-1.2-0.40.51.62.3
average inflation1.21.41.80.71.32.2
unemployment (labour force survey)77.17.66.87.38
wages and salaries (nominal growth)-0.50.61.60.51.93.2
Kc/EUR exchange rate25.726.22725.426.727.3
household consumption-0.40.10.60.30.81.8

20152016
minimumaveragemaximumminimumaveragemaximum
GDP22.53.82.22.63
average inflation1.322.70.91.82.7
unemployment (labour force survey)677.55.36.67
wages and salaries (nominal growth)1.63.75.42.23.86.6
Kc/EUR exchange rate25.526272525.526
household consumption0.61.62.31.52.12.8

Source: Finance Ministry

Author:
www.ctk.cz

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