According to the recently published European Commission's Winter European Economic Forecast, the acceleration of economic activity expected in in the EU in 2016 is minor: GDP in the euro area is forecast to expand by 1.7% compared to 1.6% last year. Growth should pick-up further to 1.9% in 2017 but this will depend crucially on a rebound in investment, which has so far remained elusive and is sensitive to the materialisation of the risks surrounding the central scenario. As for the Czech Republic, as an exceptional boost to growth from EU co-financed investment fades, growth is expected to slow to 2.3% in 2016 before picking up again to 2.7% in 2017. The headline government deficit is expected to fall to 1.1% of GDP in 2016 and then to 1% in 2017, the forecast says. The analysis predicts lower but still strong growth driven by domestic demand, low inflation despite low spare capacity, wage growth to acceleration, positive contribution from net exports in 2016.
Read also OECD's Statistical Insights: Government assets matter too, not just debt, comparing gross debt to net financial debt, calculated as gross debt minus the value of all financial assets: "...The Czech Republic and Poland are the only two countries in which the net debt ratio increased more than the gross debt ratio. Both countries recorded increases in liabilities of more than 80%, whereas the value of assets only increased by 0.8% for the Czech Republic and by 8.7% for Poland. Combined with increases in their GDP levels of respectively 1.0% and 5.7% per year, this led to increases in their net debt ratios that exceeded those in their gross debt ratios."
14th February 2020
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