In mid-July, I had the privilege of participating in a discussion on dividends, sector taxes, and, ultimately, economic strategy with some influential and interesting economic policymakers, including Josef Stredula of the Unions, Karel Havlicek of Association of Small Businesses, and Radek Spicar of the Confederation of Industry. Everyone at the table deals with these issues daily, and do not agree on many details. This can sometimes lead to the conclusion that they agree on nothing. That is not true. In such a situation, sometimes it is necessary to widen the angle of the lens and, once you see the wider landscape, you can refocus.
Inflation decelerated to 2.3% in July from 2.6% in the previous month. This weaker print was driven mainly by lower food prices but core inflation accelerated further. This is no game changer for the central bank's hawkish outlook for this year.
The Czech unemployment rate rose slightly in July, an often-seen seasonal effect. But the labour market is still tight and job vacancies increased to new historical highs.
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The foreign trade balance reached a CZK98.5 billion surplus in the first half of 2018, ending below last year's level due to stronger investments, higher oil prices and a deceleration in car exports. But this is still reasonable result given a 5% strengthening in the koruna, constrained capacity of Czech producers and weaker foreign demand.
Strategic Directions for Czech Economic Policy
- 1) The home of value-added manufacturing
- 2) Prague-Brno-Ostrava Creative Triangle
- 3) Health Care as an export industry
- 4) Government as a competitive advantage
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