Macroeconomic Forecast - April 2022

ISSN 2533-5588

Introduction and Summary

Russia’s military aggression against Ukraine has completely changed the picture of the world in 2022 and damaged growth prospects. The most serious consequence of the war is, of course, the loss of human life and the humanitarian crisis, but the economic consequences are also very serious. Although Russia and Ukraine account for only around 2% of global GDP, they play a significant role as suppliers of many raw materials. The Russian invasion has thus had an impact on commodity markets in terms of price increases and higher volatility. The war has also underlined the importance of energy security and reducing dependence on Russia for key energy imports.

As a result of the war in Ukraine, we can at least in the short term expect lower economic growth, deeper problems in supply chains and intensification of already high inflationary pressures. In addition, fiscal policy will have to cope with increased spending to provide for Ukrainian refugees and to support the poorest households threatened by high energy prices.

In Q4 2021, real gross domestic product of the Czech Republic, adjusted for seasonal and calendar effects, increased by 0.8% QoQ. Year-on-year growth reached 3.7%.

Household consumption grew by 9.4%. The extremely high growth rate reflected not only the base effect but also an increase in real disposable income and a significant year-on-year decline in the saving rate. General government consumption grew by 2.6% due to an increase in employment and purchases of goods and services.

Gross fixed capital formation was only 0.9% higher. Investment in transport equipment and dwellings increased more significantly, while other categories stagnated or declined. From a sectoral perspective, growth was driven by household investment.

As in Q3, the contribution of the change in inventories and valuables to economic growth (5.8 pp) was the dominant factor behind the increase in economic output. Firms replenished inventories, presumably to avoid shortages in component supplies and losses from high inflation, and stocks of work in progress were also likely to have increased.

By contrast, the contribution of the foreign trade balance was deeply negative (−7.1 pp), not only because of shortfalls in export production but also because of the high rate of imports due to strong inventory accumulation.

The Czech Republic’s economic output grew by 3.3% in 2021, with all components of domestic demand contributing positively, most notably the change in inventories and household consumption. In contrast, the balance of foreign trade in goods slowed down the growth of the economy.

The outcome of 2022 will be fundamentally affected by Russian aggression and a change in the setting of international trade relations. Amid general uncertainty, we are working with a scenario that the main negative impacts will be concentrated in Q2. The full-year growth rate of the Czech economy should slow to 1.2%, driven by government and private sector investment and consumption. However, household consumption will be dampened by a sharp increase in the cost of living, especially energy prices, and tighter monetary policy. The external trade balance should hardly affect growth dynamics.

High inflation slows economic growth and lowers living standards. The average inflation rate is expected to reach 12.3% this year. Annual inflation is expected to be in double digits for the rest of the year, peaking above 13% in Q2. Oil, electricity and gas prices should contribute significantly to the exceptionally strong consumer price growth. Higher costs of firms will then be reflected in the prices of goods and services. Problems in supply chains and wage costs in the private sector will also be pro-inflationary. However, the increase in monetary policy rates will weaken domestic demand pressures and contribute to the appreciation of the koruna against the euro, which will have an anti-inflationary effect.

In 2023, the average inflation rate could slow to 4.4%. Annual inflation should only approach the Czech National Bank’s 2% inflation target at the end of the year.

In the labour market, imbalances related to labour shortages, which are evident in virtually all sectors of the economy, are further exacerbated. The unemployment rate averaged 2.8% in 2021 and could fall to 2.5% this year. However, due to the lagged effects of weak growth this year, the unemployment rate could rise slightly to 2.6% in 2023.

The current account of the balance of payments ended with a deficit of 0.8% of GDP in 2021, the first deficit since 2013. The balance of services and primary and secondary income should not change significantly in relative terms over the forecast horizon. However, component shortages, together with rising input and energy prices, should lead to a further deterioration in the goods balance this year. Thus, the current account deficit is expected to reach 2.2% of GDP in 2022 and could narrow to 1.9% of GDP in 2023.

Public finances, which ended up in a deficit of 5.9% of GDP in 2021, were still affected by the coronavirus epidemic, its economic consequences and the measures implemented in the health sector, as well as by the impact of the government’s stimulus policy. The estimated deficit of 4.5 % of GDP for this year reflects the waning epidemic, the expected economic and financial consequences of the Russian aggression against Ukraine and the associated humanitarian crisis, as well as the support to households and firms affected by the enormous price increases. Public debt is likely to rise from 41.9% of GDP in 2021 to 42.7% of GDP by the end of 2022.

Main Macroeconomic Indicators
  2017 2018 2019 2020 2021 2022 2023 2021 2022
Current forecast Previous forecast
Nominal GDP bill. CZK 5 111 5 410 5 790 5 694 6 121 6 618 7 135 6 103 6 617
  nominal growth in % 6,5 5,8 7,0 -1,7 7,5 8,1 7,8 7,2 8,4
Gross domestic product real growth in % 5,2 3,2 3,0 -5,8 3,3 1,2 3,6 2,9 3,1
   Consumption of households real growth in % 4,0 3,5 2,7 -6,8 4,4 0,5 4,5 4,8 2,3
   Consumption of government real growth in % 1,8 3,8 2,5 3,4 3,0 1,0 1,0 1,9 0,4
   Gross fixed capital formation real growth in % 4,9 10,0 5,9 -7,5 0,6 2,2 5,9 0,8 5,4
   Contribution of net exports pp 1,2 -1,2 0,0 -0,5 -3,8 0,1 0,2 -3,0 0,6
   Contrib. of change in inventories pp 0,5 -0,5 -0,3 -0,8 4,3 0,0 -0,4 3,2 0,0
GDP deflator growth in % 1,3 2,6 3,9 4,4 4,0 6,9 4,1 4,1 5,2
Average inflation rate % 2,5 2,1 2,8 3,2 3,8 12,3 4,4 3,8 8,5
Employment (LFS) growth in % 1,6 1,4 0,2 -1,3 -0,4 1,2 0,2 -0,4 1,1
Unemployment rate (LFS) average in % 2,9 2,2 2,0 2,6 2,8 2,5 2,6 2,8 2,3
Wage bill (domestic concept) growth in % 9,2 9,6 7,8 0,2 6,6 6,0 6,2 5,7 5,4
Current account balance % of GDP 1,5 0,4 0,3 2,0 -0,8 -2,2 -1,9 -1,0 -1,3
General government balance % of GDP 1,5 0,9 0,3 -5,8 -5,9 -4,5 -3,2 -6,1 .
Exchange rate CZK/EUR   26,3 25,6 25,7 26,4 25,6 24,4 24,2 25,6 24,4
Long-term interest rates % p.a. 1,0 2,0 1,5 1,1 1,9 3,9 3,6 1,9 3,3
Crude oil Brent USD/barrel 54 71 64 42 71 105 91 71 76
GDP in the euro area real growth in % 2,8 1,8 1,6 -6,5 5,3 2,6 2,9 5,1 3,9

Tables and Graphs

Preparation of the Macroeconomic Forecasts

Evaluation of Forecasting History at the Ministry of Finance


  • The Macroeconomic Forecast is prepared by the Economic Policy Department of the Czech Ministry of Finance. It contains a forecast for the years 2022 and 2023, and for certain indicators an outlook for the 2 following years (i.e. until 2025). It is published on a quarterly basis (in January, April, August and November).
  • Any comments or suggestions that would help us improve the quality of our publication and closer satisfy the needs of its users are welcome. Please send any comments to the following email address: macroeconomic.forecast(at)
  • Cut-off Date for Data Sources:
    The macroeconomic forecast was prepared on the basis of data known as of 31 March 2022. The cut-off date for the fiscal forecast was 6 April 2022.

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