The Czech Banking Association (ČBA) has revised its economic forecast downward, projecting the country’s GDP to grow by 1.7% this year. This adjustment reflects mounting concerns over the impact of trade wars and associated uncertainties on the Czech economy.
The revision marks a significant shift from the Association’s more optimistic February outlook, which had anticipated 2.1% growth for the current year and 2.4% for the following year. However, the economy is expected to show some improvement, with growth accelerating to 2% in the following year.
Jan Vejmělek, an analyst at Komerční banka, explains that while the Czech economy will continue to grow, trade war tensions are expected to negatively impact both domestic investment activity and exports. Nevertheless, he points to household and government consumption as reliable growth drivers, particularly noting increased defense spending.
The European Commission has similarly adjusted its forecast, now expecting Czech GDP to increase by 1.9%, down from its previous autumn projection of 2.4%. The Commission anticipates only a modest acceleration to 2.1% growth in the following year.
Meanwhile, the Czech National Bank maintains its current year growth forecast at 2% but has reduced next year’s projection to 2.1%, down from the previously expected 2.4%. The bank also warns of a less favorable inflation outlook than initially anticipated.