Page 19 - CE Outlook Regions 2022

Official FX reserves (EUR bn) 86.9 124.6 126.6 134.0 140.5

Gross foreign debt (% of GDP) 72.9 85.5 81.6 75.7 75.5

CZK/EUR (avg) 27.0 26.3 25.6 25.7 26.4 25.7 25.3

CZK/USD (avg) 24.4 23.3 21.7 22.9 23.1 21.5 21.4

Source: Czech National Bank, Czech Statistics Office, Eurostat, Finance Ministry, European Commission

2.1.1 GDP growth

Almost two years of the COVID-19 crisis have had a significant
impact on the Czech economy and, given the increasing number of
COVID-19 positive cases since autumn 2021 in Europe, its recovery
could be impeded by further waves of infections.

The Czech central bank (CNB) expects Czech GDP to close 2021
with a growth of 1.9%, followed by 3.5% growth in 2022 (same as
the IMF and Komercni Banka´s (KB) forecasts), and by 3.8% in
2023. The EBRD forecast for 2022 is more optimistic, expecting the
Czech economy to increase by 4.6% in 2022 on the back of robust
domestic demand, supported by EU funds, and an improved global
outlook. Negative impacts are tied to supply chain issues and
COVID-19 epidemic waves.

IMF recommends that policy support should be cautiously reduced,
while ensuring policy coordination to avoid cliff effects. Support
should be focused on slowing down an increasing inflation,
rebuilding policy space and addressing macrofinancial imbalances.

According to the forecast published by the Czech finance ministry,
Czech economic growth should stand at 4.1% in 2022, as a result of
a continued recovery in private consumption and fixed investment
and a more favourable contribution from the external trade balance.

Besides the effect of recovering exports, the economy will be
supported by steady growth in private and government investment,
supported by a continued rise in household consumption,
accompanied by spending of previously created forced savings. The
savings rate is projected to start declining in 2022, given stable
economic conditions and more spending opportunities.

Also, the European Commission (EC) sees the main driver of Czech
economy in early 2022 in domestic and foreign demand, including
public investment supported by the Recovery and Resilience Facility

19 CE Outlook 2022 www.intellinews.com