Economic policy
This section reports on economic policy initiatives of the Czech government, the EU, and other entities that have a direct impact on the competitiveness of the country. It also includes information on economic priorities of the AmCham and other leading associations.
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Spotlight issue
Key factors that will determine Czech recovery
How the Czech Republic will recover from the pandemic depends on how many moving parts work together. During our General Assembly session, members of the AmCham Board presented major factors that will influence businesses and recovery of the economy.
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The CNB surprised with a 75bp rate hike
The central bank raised its key repo rate by 75bp at its September meeting, whereas the market expected a 50bp hike. The strong rate increase is primarily a response to rising inflation, which is already reflected in higher inflation expectations. According to our forecast, inflation will continue to rise for the rest of the year, exceeding 5% yoy at its end. Therefore, we expect a repo rate of 2.00% at end-2021 and a further increase to 2.50% at end-2022. This is close to the level that the central bank considers to be monetary policy neutral.
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Czech economic rebound in 2Q supported by rapid easing of COVID restrictions
The third and final CZSO estimate published today confirmed that Czech GDP increased 1.0% qoq in 2Q after a 0.4% decline in 1Q. In year-on-year terms, the economy grew 8.1% (the previous estimate was 8.2% yoy), with a significant effect of a lower base from 2Q20. Economic activity almost reached pre-crisis levels, hitting 95% of the level seen in 4Q19.
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