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March 1, 2019 www.intellinews.com I Page 10
Hard Brexit could drag Czech economic growth down to under 2%
Nelly Tomcikova in Prague
Hard Brexit could drag Czech economy growth down to under 2%, reducing the growth of domes- tic economy by 0.7 to 1.4 percentage points (pp), according to Czech National Bank (CNB) board member Tomas Holub, who spoke at a conference on Brexit on February 26. The main reason is to be a drop in demand for Czech exports in the Eurozone.
“This scenario can be perceived as an argument for higher interest rates, but it's a kind of uncer- tainty when it's better to wait and see how the things develop, and then consider a monetary poli- cy response,” Holub said, adding that in the case of a no-deal, a drop in export volumes and cooling of economic growth would be anti-inflationary. Infla- tion rate increases would then be affected by the weaker koruna, introduction of tariffs and closing of some global production chains.
Czech economic growth could slow down by 1 pp this year in case of a no-deal Brexit, said the vice-president of the CNB Tomas Nidetzky to Reuters earlier in February. In 2020, this would
lead to a decrease of 0.5-0.75 pp of GDP.
According to the finance ministry’s macroeco- nomic prognosis, the Czech economy would have risen by less than 2% in case of no deal, reducing performance of the economy by 0.6 to 0.8 pp.
V4 countries’ parliamentary foreign affairs com- mittees have urged the European Commission, the UK and other EU member states to look for solutions for a controlled Brexit, according to the Foreign Affairs Committee chair Katarina Csefalvayova, daily online Hlavne.sk reported.
“According to lawmakers of V4 countries, the deal hammered out by the EU and British Prime Minister Theresa May is the best possible under the circumstances, although they respect the fact it was turned down by the British parliament. They also appreciate the fact that Great Britain also rejected a hard Brexit. Despite this, however, governments of V4 countries continue to prepare for this possibility,” Csefalvayova added.
Czech GDP y/y