FinMin improves Czech GDP growth to 1.7 pct this year


11.04.2014 15:59

Prague - The Czech Finance Ministry in a new forecast improved its estimate of GDP expansion for this year to 1.7 percent from January´s 1.4 percent, and next year´s estimate stays at a 2 percent growth of economic output, the ministry said in a press release today.


Strojírny Wikov MGI, výroba - ilustrační foto ČTK Taneček David

"All expenditure items should have a positive impact on GDP growth this year and next," the ministry said. "Domestic demand should make up two-thirds and a foreign trade result one-third of the growth figure," the ministry said.

Inflation should stay very low this year despite the crown´s weakening caused by the Czech National Bank´s (CNB) forex interventions last November.

The ministry puts the inflation rate at 1 percent this year, the same rate as in the previous forecast, and predicts a rise to 2.3 percent next year, down 1 percentage point from the previous estimate.

Despite expansionary budget policy, the ministry expects a public finance deficit at around 1.8 percent of GDP, up from 1.44 percent last year.

The Czech Republic would thus meet a 3 percent ceiling for the deficit.

The economy will expand by 2.2 percent in 2016 and by 2.5 percent in 2017, according to the forecast.

The CNB said in its February forecast that GDP will rise by 2.2 percent this year and by 2.8 percent next year.

The European Commission estimated GDP growth at 1.8 percent this year and at 2.2 percent next year.

The Organisation for Economic Cooperation and Development (OECD) foresaw a 1.1 percent economic expansion for the current year and a 2.3 percent increase next year.

Estimates by Finance Ministry (January estimates in brackets):

20132014 estimate2015 estimate
GDP-0.9 %1.7 % (1.4 %)2 % (2%)
average inflation1.4 %1 % (1 %)2.3 % (2.4 %)
household consumption (development)0.1 %0.6 % (0.6 %)1.5 % (1.5 %)
unemployment7 %6.8 % (7 %)6.6 % (6.9 %

Source: Finance Ministry

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