Macroeconomic Forecast - January 2015
Summary of the Forecast
Real GDP increased by 0.4% QoQ in the third quarter of 2014 and a moderate recovery of economic activity therefore continued. We estimate that GDP increased by 2.4% last year and expect the economy to grow by 2.7% this year. In 2016, real GDP growth could slow down marginally to 2.5%. Growth in both years should be driven exclusively by domestic demand, with the contributions of final consumption expenditure and gross capital formation being roughly balanced. Net exports of goods (in constant prices) should weigh on growth as relatively solid growth of domestic demand will push up imports.
The average inflation rate reached only 0.4% in 2014. Consumer prices should grow very slowly also this year, especially due to the slump in the price of oil. The average inflation rate could thus decrease further to 0.3% this year. In 2016, the main factors affecting inflation should have either neutral or pro-inflationary impact. Growth of consumer prices should therefore accelerate, but we expect inflation to remain below the 2% inflation target of the CNB.
Compared with the previous Forecast, the labour market outlook has slightly improved, but the expected trends haven’t changed. Thanks to the gradual pick-up in economic activity, the unemployment rate should be declining moderately, whereas employment should be modestly rising.
Total wage bill could increase by 3.9% this year. In 2016 we expect its growth to accelerate marginally to 4.1%. Apart from a gradual improvement in the state of the private sector, which is due to economic recovery, total wage bill is positively affected by an increase in the wage bill in state administration.
We estimate that the deficit of the general government sector reached 1.3% of GDP in 2014, a similar level as in 2013. As a result of the government’s effort to support economic growth, and termination of certain restrictive measures, the balance should deteriorate this year. However, the deficit should remain well below the threshold of 3% of GDP. The indebtedness of the general government sector should further decrease from an estimated 43.2% of GDP in 2014 to 41.3% of GDP in 2015.
Current account of the balance of payments could post a small surplus both in this and the next year. Further increases of surplus on the balance of goods will be supported by the development of the price of oil and the exchange rate. However, this will be partially offset by the continued deepening of the deficit on the primary income balance.
In our opinion, risks to the Forecast are tilted to the downside, especially due to the risks that we see in the external environment of the Czech economy.
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2014 | 2015 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Current forecast | Previous forecast | |||||||||
| Gross domestic product | bill. CZK | 3 954 | 4 022 | 4 048 | 4 086 | 4 284 | 4 509 | 4 698 | 4 284 | 4 467 |
| Gross domestic product | growth in %, const.pr. | 2,3 | 2,0 | -0,8 | -0,7 | 2,4 | 2,7 | 2,5 | 2,4 | 2,5 |
| Consumption of households | growth in %, const.pr. | 1,0 | 0,2 | -1,8 | 0,4 | 1,5 | 2,8 | 2,3 | 1,4 | 1,7 |
| Consumption of government | growth in %, const.pr. | 0,4 | -2,9 | -1,0 | 2,3 | 1,9 | 2,0 | 1,3 | 1,9 | 2,0 |
| Gross fixed capital formation | growth in %, const.pr. | 1,3 | 1,1 | -2,9 | -4,4 | 4,5 | 5,3 | 4,1 | 4,5 | 4,9 |
| Contr. of foreign trade to GDP growth | p.p., const.pr. | 0,5 | 1,9 | 1,3 | 0,0 | -0,2 | -0,5 | -0,2 | -0,1 | 0,0 |
| Contr. of increase in stocks to GDP growth | p.p., const.pr. | 0,8 | 0,2 | -0,2 | -0,2 | 0,3 | 0,1 | 0,3 | 0,4 | 0,0 |
| GDP deflator | growth in per cent | -1,5 | -0,2 | 1,4 | 1,7 | 2,4 | 2,5 | 1,6 | 2,4 | 1,8 |
| Average inflation rate | per cent | 1,5 | 1,9 | 3,3 | 1,4 | 0,4 | 0,3 | 1,4 | 0,5 | 1,5 |
| Employment (LFS) | growth in per cent | -1,0 | 0,4 | 0,4 | 1,0 | 0,6 | 0,4 | 0,2 | 0,4 | 0,3 |
| Unemployment rate (LFS) | average in per cent | 7,3 | 6,7 | 7,0 | 7,0 | 6,1 | 5,7 | 5,6 | 6,3 | 6,1 |
| Wage bill (domestic concept) | growth in %, curr.pr. | 0,6 | 2,2 | 2,1 | -0,4 | 3,0 | 3,9 | 4,1 | 2,9 | 3,9 |
| Current account / GDP | per cent | -3,6 | -2,1 | -1,6 | -1,4 | -0,2 | 1,0 | 0,5 | 0,0 | -0,3 |
| Assumptions: | ||||||||||
| Exchange rate CZK/EUR | 25,3 | 24,6 | 25,1 | 26,0 | 27,5 | 27,7 | 27,6 | 27,5 | 27,5 | |
| Long-term interest rates | % p.a. | 3,7 | 3,7 | 2,8 | 2,1 | 1,6 | 1,0 | 1,6 | 1,7 | 1,7 |
| Crude oil Brent | USD/barrel | 80 | 111 | 112 | 109 | 99 | 54 | 67 | 105 | 101 |
| GDP in Eurozone (EA-12) | growth in %, const.pr. | 2,0 | 1,6 | -0,7 | -0,5 | 0,8 | 1,0 | 1,5 | 0,7 | 1,1 |
Tables and Graphs
Preparation of the Macroeconomic Forecast
- Preparation of the Macroeconomic Forecast – a Look under the Hood - July 2013 (.PDF, 91 kB)
- Updated: 25.07.2013
Evaluation of Forecasting History at the Ministry of Finance
- Macroeconomic Forecasts at the MoF - A Look into the Rear view Mirror - July 2013 (.PDF, 184 kB)
- AnalytIQ - tools to assess the MoF forecasts accuracy and much more - January 2015ZIP (305kB)
- To run, the application requires Microsoft Excel 2010 or Microsoft Excel 2007. Macros need to be enabled.
- Updated: 30.01.2015
Information
-
The Macroeconomic Forecast is prepared by the Financial Policy Department of the Czech Ministry of Finance on a quarterly basis. It contains a forecast for the current and following years (i.e. until 2016) and for certain indicators an outlook for another 2 years (i.e. until 2018). As a rule, it is 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 closer satisfy the needs of its users are welcome. Please direct any comments to the following email address: macroeconomic.forecast(at)mfcr.cz
-
Cut-off Date for Data Sources:
The forecast was made on the basis of data known as of 13 January 2015. No political decisions, newly released statistics, or world financial or commodity market developments could have been taken into account after this date.