Page 7 - Central & Southeast Outlook 2020
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Unemployment rate (avg, %) 6.5 5.5 4.2 3.2 2.8 3.2 3.7
Nominal industrial wages (% yoy) 2.6 4.3 6.6 7.5 6.3 4.8 4.2
Producer prices (avg, % yoy) -3.2 -3.3 1.8 2 2.8 0.5 1.5
Consumer prices (avg, % yoy) 0.3 0.7 2.5 2.1 2.8 2.5 2
Consumer prices (eop, % yoy) 0 2 2.4 2 2.8 2.3 2
General budget balance (% of GDP) -0.6 0.7 1.6 0.9 0 0.2 -0.3
Public debt (% of GDP) 40 36.8 34.7 31.1 30.9 30.5 30.4
Current account balance (% of GDP) 0.2 1.6 1.1 0.3 1.1 0.3 0
Official FX reserves (EUR bn) 59.4 81.3 123.2 124.7 132.4 134 135.6
Gross foreign debt (% of GDP) 68.5 73.4 89.3 81.8 79.1 76.8 74.7
EUR/CZK (avg) 27.3 27 26.3 25.6 25.7 25.8 25.8
USD/CZK (avg) 24.6 24.4 23.4 21.7 22.8 22.8 22 Source: National sources, RBI/Raiffeisen RESEARCH
GDP growth is expected to slow in 2020, with labour shortages remaining the main bottleneck to Czech economic growth that will also contribute to persistent high growth of wages.
The Organisation for Economic Co-operation and Development (OECD) expects Czech economic growth to slow down to 2.1% in 2020, driven mainly by household consumption and government spending. In 2021, economic growth is expected to ease to 2-2.25%.
According to the Czech National Bank, GDP growth will reach 2.4% in 2020, mainly due to weaker external demand. It should accelerate back to 2.8% in 2021. The European Commission predicts GDP growth to slow down in 2020 and 2021 to 2.2% and 2.1%, respectively, which is broadly in line with the economy’s estimated potential growth rate.
The Ministry of Finance published the most pessimistic outlook, expecting the economy to grow by 2.0% in 2020, also driven by household consumption, reflecting the ongoing strength of wage momentum in combination with the extremely low unemployment rate.
The ministry predicts growth in labour demand to weaken as the economy slows down. By contrast, labour supply, driven mainly by demographic and structural factors, is likely to rise faster than demand. Still, the situation in the labour market is expected to remain tight and companies are likely to struggle to fill job vacancies. There is no room for the unemployment rate to decline further. It is expected to amount to 2.2% in 2020 and to 2.3% in 2021.
7 CESE Outlook 2020 www.intellinews.com
