Macroeconomic Forecast - April 2014
Summary of the Forecast
According to the CZSO’s current data, real GDP decreased by 0.9% in the whole of 2013. The surprisingly strong QoQ growth of 1.8% in Q4 2013 was largely a product of one-off factors (stockpiling cigarette tax stamps as a consequence of an increase in the excise tax on cigarettes as of 1 January 2014). This will be negatively reflected in growth particularly in Q1 2014; however, gradual economic recovery should continue. GDP could increase by 1.7% in 2014, while in 2015 growth could accelerate to 2.0%. In both 2014 and 2015, all expenditure components should contribute positively to economic growth. Domestic demand should account for two thirds of economic growth and foreign trade balance for the remainder.
Despite the weakening of the Czech koruna due to the CNB’s foreign exchange interventions, 2014 should be characterized by very low inflation. Unlike in previous years, administrative measures (especially a decrease in electricity prices) should have an anti-inflationary impact throughout 2014. Inflation rate could thus reach 1.0% this year. In 2015, consumer price growth could accelerate to 2.3% in relation to the economic recovery and delayed effects of the weaker koruna. The planned introduction of the third VAT rate of 10% for selected goods and services, which is expected to take effect in 2015, together with the abolition of regulatory fees for visit to a doctor, will have a slight anti-inflationary impact.
Employers’ efforts to increase labour productivity should lead to only minimal growth of employment in both 2014 and 2015. We also expect an impact on the unemployment rate (LFS), which should in both years decrease only slightly, in spite of gradual economic growth.
In 2014, the wage bill could increase by 1.8%; for 2015 we expect growth to accelerate to 3.5%.
According to the CZSO’s preliminary estimate, the government sector deficit reached 1.4% of GDP in 2013. In spite of the negative output gap, fiscal effort reached 1.3 pp. In 2014, an expansionary fiscal policy leading to a deficit of around 1.8% of GDP is expected. In 2013, the government sector debt as a percentage of GDP decreased slightly to 46%. In 2014, we expect it to fall further to 44% because of changes in liquidity management.
Owing in particular to the favourable development of the foreign trade balance, we expect that the current account deficit of the balance of payments will be negligible in 2014 and 2015.
We regard the forecast risks as balanced.
|Current forecast||Previous forecast|
|Gross domestic product||growth in %, const.pr.||2,5||1,8||-1,0||-0,9||1,7||2,0||-1,4||1,4||2,0|
|Consumption of households||growth in %, const.pr.||0,9||0,5||-2,1||0,1||0,6||1,5||-0,2||0,6||1,5|
|Consumption of government||growth in %, const.pr.||0,2||-2,7||-1,9||1,6||0,8||0,7||1,6||1,0||0,4|
|Gross fixed capital formation||growth in %, const.pr.||1,0||0,4||-4,5||-3,5||2,7||2,0||-4,8||-0,3||2,6|
|Contr. of foreign trade to GDP growth||p.p., const.pr.||0,6||1,9||1,7||-0,3||0,5||0,6||-0,2||0,7||0,5|
|Contr. of increase in stocks to GDP growth||p.p., const.pr.||1,0||0,1||-0,1||-0,2||0,2||0,1||-0,2||0,3||0,1|
|GDP deflator||growth in per cent||-1,6||-0,9||1,6||1,9||1,8||1,7||1,6||1,7||1,3|
|Average inflation rate||per cent||1,5||1,9||3,3||1,4||1,0||2,3||1,4||1,0||2,4|
|Employment (LFS)||growth in per cent||-1,0||0,4||0,4||1,0||0,2||0,2||0,9||0,1||0,1|
|Unemployment rate (LFS)||average in per cent||7,3||6,7||7,0||7,0||6,8||6,6||7,0||7,0||6,9|
|Wage bill (domestic concept)||growth in %, curr.pr.||0,8||2,2||1,8||-0,9||1,8||3,5||-0,2||2,2||4,3|
|Current account / GDP||per cent||-3,9||-2,7||-1,3||-1,4||-0,4||-0,3||-1,7||-0,2||-0,4|
|Exchange rate CZK/EUR||25,3||24,6||25,1||26,0||27,3||27,2||26,0||27,3||27,2|
|Long-term interest rates||% p.a.||3,7||3,7||2,8||2,1||2,4||2,6||2,1||2,4||2,5|
|Crude oil Brent||USD/barrel||80||111||112||109||105||101||109||104||101|
|GDP in Eurozone (EA-12)||growth in %, const.pr.||1,9||1,6||-0,6||-0,4||1,1||1,5||-0,4||0,9||1,5|
- Risks to the Forecast - April 2014PDF (114kB)
- A - Forecast Assumptions - April 2014PDF (365kB)
- B - Economic Cycle - April 2014PDF (218kB)
- C - Forecast of the Development of Macroeconomic Indicators - January 2014PDF (193kB)
- D - Monitoring of Other Institutions Forecasts - April 2014PDF (112kB)
- E - Looking back at 2013PDF (135kB)
Tables and Graphs
- Tables and Graphs - April 2014PDF (361kB)
- C.1 - Economic Output - April 2014PDF (168kB)
- C.2 - Prices - April 2014PDF (165kB)
- C.3 - Labour Market - April 2014PDF (157kB)
- C.4 - External Relations - April 2014PDF (153kB)
- C.5 - International Comparisons - April 2014PDF (125kB)
Macroeconomic Forecast in a Nutshell
Structure of the presentation
risks of the forecast
monetary policy, the financial sector and foreign exchange rates
policy statement of the government ‐ priorities
Forecast of Macroeconomic Indicators
Preparation of the Macroeconomic Forecast
- 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 2013PDF (184kB)
- AnalytIQ - tools to assess the MoF forecasts accuracy and much more - April 2014ZIP (292kB)
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- Updated: 11.4.2014
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 2015) and for certain indicators an outlook for another 2 years (i.e. until 2017). As a rule, it is published in the second half of the first month of each quarter.
Cut-off Date for Data Sources:
The forecast was made on the basis of data known as of 1 April 2014. No political decisions, newly released statistics, or world financial or commodity market developments could have been taken into account after this date.