1st July 2014

Competitiveness: IMF estimates and Czech economic growth

On Monday IMF published its estimate of economic growth for the Czech Republic for the years 2014 and 2015 during the press conference after this year’s round of annual consultations between IMF and the Czech Republic as a member state of IMF. IMF estimates that Czech GDP should grow by 2.5 % this year and also by 2.5 % in 2015.  This rate of growth is higher than in April when IMF foresaw growth of only 1.9 % after 1.1 % decline in 2013. According to the IMF the Czech GDP is mainly pulled by exports but also the support from domestic demand is gradually rising. IMF also appreciated Czech Central Bank monetary intervention where exchange rate is not a target but a tool and that it should be maintained until the fulfilment of Czech inflationary goal is sustainable and inflation expectation is safely anchored.

On Tuesday also Czech Statistical Office precised its estimates based on actual numbers. Czech economy grew quarterly by 0.8 % and by 2.9 % year-on-year. Last time when Czech export showed such growth was in third quarter of 2008 before the financial and economic crisis affected Czech economy. However, it is a fact that the base for comparison in 2013 was according to economists the worst situation ever. Nonetheless, like the IMF also the Czech Statistical Office perceives Czech economic growth as demand based. The Czech economic growth is mainly contributed by manufacturing industry with all demand components rising except for the stock level which allows producers to sell out their stock and improve their cash flow. In the light of these findings Czech economic growth seems stable and well based.

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Members of the American Chamber of Commerce in the Czech Republic