Macroeconomic Forecast - October 2013
Summary of the Forecast
Real GDP, which showed a surprisingly marked QoQ decline of 1.3% in Q1 2013, increased by 0.6% QoQ in Q2 2013. The economy technically emerged from the 18-month recession; however, GDP was 1.3% lower than in Q2 2012. Despite the expected economic recovery, economic output for the whole year should decrease by 1.0%, in particular due to a decline in gross capital formation. In 2014, however, with a positive contribution from all components except for fixed investment, GDP could increase by 1.3%.
Consumer prices should grow at a sluggish pace. We expect the average inflation rate to reach 1.4% in 2013 and 0.7% in 2014. Inflation in 2014 will be very low in particular thanks to a decline in electricity prices.
Employment, the YoY growth of which was accelerating throughout the whole of the last year despite the recession, could increase by 1.2% this year. This somewhat paradoxical development was caused by a rise in the number of part-time jobs and a decline in the ratio of total hours worked to employment. For 2014, employment growth of 0.4% is estimated. The unemployment rate (LFS) should be slowly rising from the last year’s 7.0%. It could reach 7.1% in 2013 and 7.3% in 2014. Growth in the wage bill, which should reach 0.8% in 2013, could accelerate to 2.5% in 2014. Therefore, the total wage bill growth rate is expected to exceed the dynamics of nominal GDP in both years.
According to the MoF’s end-Septermber notifications, the government sector deficit should reach 2.9% of GDP in 2013, which is also the target value for 2014. In addition to the rules of the Stability and Growth Pact, any room for the stabilizing role of fiscal policy is also restricted by the persisting structural deficits of the government sector.
The current account deficit should not exceed 2% of GDP, which is a sustainable level fully consistent with the external macroeconomic balance.
Despite an uncertain outlook for the external environment and the still relatively low confidence of domestic agents in future economic development, we evaluate the forecast risks as balanced.
| 2010 | 2011 | 2012 | 2013 | 2014 | 2012 | 2013 | 2014 | ||
|---|---|---|---|---|---|---|---|---|---|
| Current forecast | Previous forecast | ||||||||
| Gross domestic product | growth in %, const.pr. | 2,5 | 1,8 | -1,0 | -1,0 | 1,3 | -1,2 | -1,5 | 0,8 |
| Consumption of households | growth in %, const.pr. | 0,9 | 0,5 | -2,1 | 0,2 | 0,9 | -2,7 | -0,8 | 0,4 |
| Consumption of government | growth in %, const.pr. | 0,2 | -2,7 | -1,9 | 0,8 | 0,2 | -1,2 | 0,5 | -0,9 |
| Gross fixed capital formation | growth in %, const.pr. | 1,0 | 0,4 | -4,5 | -4,8 | -0,8 | -2,7 | -4,3 | -0,6 |
| Cont. of foreign trade to GDP growth | p.p., const.pr. | 0,6 | 1,9 | 1,7 | 0,6 | 0,6 | 1,4 | 0,2 | 0,5 |
| GDP deflator | growth in per cent | -1,6 | -0,9 | 1,6 | 1,2 | 0,5 | 1,4 | 0,6 | 0,9 |
| Average inflation rate | per cent | 1,5 | 1,9 | 3,3 | 1,4 | 0,7 | 3,3 | 1,6 | 1,4 |
| Employment (LFS) | growth in per cent | -1,0 | 0,4 | 0,4 | 1,2 | 0,4 | 0,4 | 0,5 | -0,2 |
| Unemployment rate (LFS) | average in per cent | 7,3 | 6,7 | 7,0 | 7,1 | 7,3 | 7,0 | 7,5 | 7,6 |
| Wage bill (domestic concept) | growth in %, curr.pr. | 0,8 | 2,2 | 1,8 | 0,8 | 2,5 | 1,5 | 0,7 | 2,1 |
| Current account / GDP | per cent | -3,9 | -2,7 | -2,4 | -1,7 | -1,4 | -2,5 | -2,3 | -2,4 |
| Assumptions: | |||||||||
| Exchange rate CZK/EUR | 25,3 | 24,6 | 25,1 | 25,8 | 25,8 | 25,1 | 25,8 | 25,8 | |
| Long-term interest rates | % p.a. | 3,7 | 3,7 | 2,8 | 2,1 | 2,4 | 2,8 | 2,0 | 2,2 |
| Crude oil Brent | USD/barrel | 80 | 111 | 112 | 108 | 103 | 112 | 106 | 101 |
| GDP in Eurozone (EA-12) | growth in %, const.pr. | 1,9 | 1,6 | -0,6 | -0,3 | 1,0 | -0,6 | -0,5 | 1,0 |
- Risks to the Forecast - October 2013PDF (109kB)
- A - Forecast Assumptions - October 2013PDF (375kB)
- B - Economic Cycle - October 2013PDF (241kB)
- C - Forecast of the Development of Macroeconomic Indicators - October 2013PDF (196kB)
- D - Monitoring of Other Institutions’ Forecasts - October 2013PDF (112kB)
Tables and Graphs
- Tables and Graphs - October 2013PDF (368kB)
- C.1 - Economic Output - October 2013PDF (164kB)
- C.2 - Prices - October 2013PDF (164kB)
- C.3 - Labour Market - October 2013PDF (153kB)
- C.4 - External Relations - October 2013PDF (152kB)
- C.5 - International Comparisons - October 2013PDF (142kB)
Macroeconomic Forecast in a Nutshell
Structure of the presentation
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Forecast Assumptions
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risks of the forecast
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external environment
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fiscal policy
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monetary policy, interest rates and exchange rates
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structural reforms
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Economic Cycle
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Forecast of Macroeconomic Indicators
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economic output
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inflation
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labour market
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external relations
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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 2013 (.PDF, 184 kB)
- AnalytIQ - tools to assess the MoF forecasts' accuracy and much more - October 2013 (.ZIP, 319 kB)
- To run, the application requires Microsoft Excel 2010 or Microsoft Excel 2007. Macros need to be enabled.
- Updated: 07.11.2013
Information
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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 2014) and for certain indicators an outlook for another 2 years (i.e. until 2016). As a rule, it is published in the second half of the first month of each quarter.
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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
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Cut-off Date for Data Sources:
The forecast was made on the basis of data known as of 9 October 2013. No political decisions, newly released statistics, or world financial or commodity market developments could have been taken into account after this date.