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 recovery remains fragile, though, and future development is subject to many risks. Czech economy, due to Q-o-Q GDP growth since Q2 2009, has also left the contraction phase. Nevertheless, we estimate that gross domestic product dropped by 4 % in 2009.
Economic activity is expected to pick up slightly by 1.3 % in 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, GDP growth should accelerate to 2.6 % in 2011.
We estimate the average rate of inflation around 2.0 % both in 2010 and 2011, i.e. close to the CNB’s inflation target.
Diminished economic activity adversely impacts on the labour market. After an unprecedented rise of unemployment rate (LFS) from 4.4 % in 2008 to the estimated 6.7 % in 2009, the peak should be reached in 2010 at approximately 8.8 %. Unemployment rate should start declining mildly thereafter. At the same time, employment should decrease by 1.8 % this year and stagnate in 2011. Contrary to previous years, when total wage bill was rising sharply, we expect it to drop by 0.7 % in 2010. In 2011, wage bill growth should rebound to 4.5 %.
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.
In 2009, general government deficit reached 6.6 % of GDP, according to preliminary estimates. There is no change to the October forecast, although the estimate is subject to highly uncertain development of, above all, tax receipts, in particular from corporate income tax. Fiscal policy stance for 2010 corresponds to the planned general government deficit of 5.3 % of GDP.
Tables and graphs
- Tables and graphs-2010-Q1PDF (394kB)
- A.1 World Economy-2010-Q1PDF (119kB)
- A.2 General Government-2010-Q1PDF (110kB)
- A.3 Interest Rates-2010-Q1PDF (121kB)
- A.4 Exchange Rates-2010-Q1PDF (119kB)
- A.6 Demography-2010-Q1PDF (139kB)
- C.1 Economic Output-2010-Q1PDF (153kB)
- C.2 Prices of Goods and Services-2010-Q1PDF (132kB)
- C.3 Labour Market-2010-Q1PDF (146kB)
- C.4 External Ralations-2010-Q1PDF (154kB)
- C.5 International Comparison-2010-Q1PDF (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: 11th January 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.