The Ministry of Finance has improved its outlook for the Czech economy in its latest forecast. The ministry expects GDP growth of 0.1 percent this year, a revision from the January prediction of a 0.5 percent decline. According to the ministry, the economy could accelerate to three percent by 2024.
However, the high inflation currently slowing economic growth and lowering the living standards of Czechs is a significant concern. The forecast predicts inflation to be 10.9 percent this year and a decrease to 2.4 percent next year. The robust growth in consumer prices is attributed by the ministry not only to food, electricity, and natural gas but also to other services and goods. On the other hand, strengthening the Czech koruna’s exchange rate has a deflationary effect.
Minister of Finance Zbyněk Stanjura (ODS) says that inflation “should start falling quickly, and in the second half of the year, it should drop below ten percent.” According to the minister, the ministry also lowered its estimate of unemployment development, which should not exceed three percent this year.
The ministry expects a rebound in household consumption to support economic growth next year. Meanwhile, the public finance deficit is expected to reach 3.5 percent of GDP this year, and total debt is predicted to fall from last year’s 44.1 percent of GDP to 43.5 percent of GDP.
Despite the positive outlook for the Czech economy, high inflation remains a challenge. It is crucial to bring it down to stabilize the economy and improve the living standards of Czech citizens. The government’s policies and actions will be essential in achieving this goal.