Economic policy / Macroeconomic Indicators, Economic Growth
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
Shortages to send eurozone goods prices higher, but probably not for long
Goods inflation is set to rise more as shortages and supply chain disruptions will be priced through to the consumer. We find that shortages do lead to price rises, but that there is no lasting effect once shortages end, suggesting the surge in prices will be temporary
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The economy at the beginning of a strong expansion
Year-on-year data from the real economy will start to show a strong expansion from March, due to comparison with last year's pandemic outbreak. On a month-on-month basis, however, we expect weak data in the case of retail sales, as stores have closed. The manufacturing could grow in March despite problems with the supply of components. Higher prices at petrol stations will increase year-on-year inflation. For the time being, the CNB will wait for further developments. We expect interest rates to continue to rise in the fourth quarter of this year, respectively, once the risks associated with the epidemic have subsided.
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Czech economy falls by less than previously feared in 1Q
The preliminary GDP figure for the first quarter surprised on the upside. The economy fell just 0.3% QoQ, with pandemic restrictions being in place through the quarter. For the whole year, we expect GDP growth to be around 3%, although pandemic-related uncertainty remains elevated
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