Commentary on macroeconomic forecast
Ministry of Finance of the Czech Republic releases on its web pages new Macroeconomic Forecast.
The world economy is slowly emerging from a recession that resulted from the crisis on financial markets. The Czech economy has already come out of recession, with economic activity recovering from the third quarter of 2009. The recovery remains fragile, though, and future development is subject to many risks.
A slight increase in real GDP by 1.5 % is assumed for 2010. Growth structure will be influenced by recovery of our main trading partners' economies. Therefore, GDP growth should be driven mainly by foreign trade. Under current assumptions, the economy's growth could accelerate to 2.4 % in 2011.
Average rate of inflation is estimated at some 1.5 % in 2010 with growth of consumer prices to accelerate to 2.3 % in 2011.
Diminished economic activity adversely impacts on the labour market. After an unprecedented rise of unemployment rate (LFS) from 4.4 % in 2008 to 6.7 % in 2009, a peak should be reached in 2010 at 7.9 %. Unemployment rate should start declining mildly thereafter. Employment should decrease by 0.6 % in this year and grow moderately by 0.1 % in 2011. Relatively significant positive revisions of employment and rate of unemployment are due to likely improvements in structural characteristics of the labour market. Decline in wage bill, even though minimal, should continue in 2010 as well. In 2011 the wage bill could start growing again at 4.3 %.
Current account to GDP ratio should remain on a sustainable level. In 2010, current account could, for the first time since 1993, move into surplus.
Under preliminary data, general government deficit reached 5.9 % of GDP in 2009, which is by 0.7 p.p. better result than expected.
The target for general government deficit in 2010 remains at 5.3 % of GDP. Based on early 2010 data, the MoF estimated an autonomous development of performance of general government in 2010 and notified a deficit of 5.9 % of GDP. The government at its earliest session will therefore discuss and approve a set of additional measures aimed at fulfilling this target. They will include, among others, further binding of expenditures in budget chapters, reassessment of outlays within the privatization account and higher than planned inclusion of property income in revenues of public budgets.
By this step, the MoF affirms the consolidation plan - still viewed as binding - outlined in the Convergence programme.
Tables and graphs
- Tables and graphs-2010-Q2PDF (283kB)
- C.1 Economic Output-2010-Q2PDF (150kB)
- C.2 Prices of Goods and Services-2010-Q2PDF (131kB)
- C.3 Labour Market-2010-Q2PDF (139kB)
- C.4 External Ralations-2010-Q2PDF (149kB)
- C.5 International Comparison-2010-Q2PDF (124kB)
Macroeconomic forecasts are prepared by the Financial Policy Department of the Czech Ministry of Finance with quarterly periodicity. It contains a forecast for current and following years (i.e. till 2011) and for some indicators an outlook for further 2 years (i.e. till 2013). As a rule, they are published in the second half of the first month of each quarter.
Any comments or suggestions that would help us to improve the quality of our publication and bring it closer to the needs of its users are welcomed. Please direct your possible comments towards the following e-mail address: macroeconomic.forecast(at)mfcr.cz
Detailed information on fiscal developments can be found in Fiscal Outlook of the Czech Republic and are also available at: www.mfcr.cz/fiscaloutlook
Deadline for data sources: 9th April 2010
List of used abbreviations
In some cases, published aggregate data do not match sums of individual items to the last decimal place due to rounding.