Macroeconomic Forecast - July 2014
- Macroeconomic Forecast
Summary of the Forecast
Real GDP increased by 0.8% QoQ in the first quarter of 2014 (gross value added rose at an even faster pace, by 1.1% QoQ), which far surpassed the estimate from the April Macroeconomic Forecast. We have therefore revised the forecast for GDP growth in 2014 up to 2.7%. Such a substantial change – 1.0 pp – is almost exclusively due to better than expected developments in the first quarter. The economy should continue to grow at a moderate pace also in 2015, when GDP could increase by 2.5%. Main expenditure components should all contribute positively to GDP growth in both 2014 and 2015. Domestic demand should account for roughly three quarters of the growth, while balance of foreign trade for the remaining part.
Despite the weakening of the Czech koruna due to the CNB’s foreign exchange interventions, the year 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. Average inflation rate could thus reach 0.6% this year. Consumer price growth should accelerate in 2015, but we assume that inflation will still be hovering below the CNB’s inflation target.
Much better than previously estimated economic developments in the first quarter of 2014, which led to the change in the forecast for GDP, were also reflected in the improvement in expected developments on the labour market. Compared to the April Macroeconomic Forecast, we assume a faster decline in unemployment rate, which could average 6.1% in 2015. Also, employment should grow stronger in 2014 than we thought so far.
Total wage bill could increase by 2.8% this year. In 2015 we expect its growth to accelerate to 3.8%. A proposed increase in the wage bill in state administration, apart from an expected gradual improvement in the state of the private sector, should impact positively on total wage bill.
We expect the government sector to post a deficit of 1.5% of GDP this year. The balance should thus remain unchanged from the previous year. At the same time, the government sector debt should decline by 2.0 pp to 44.0% of GDP.
For the first time since 1993, the current account of the balance of payments could post a small surplus this year, mainly thanks to positive developments in the trade balance. In 2015, the current account should be balanced.
We regard risks to the Forecast as balanced.
|Current forecast||Previous forecast|
|Gross domestic product||bill. CZK||3 791||3 823||3 846||3 884||4 061||4 216||3 884||4 023||4 173|
|Gross domestic product||growth in %, const.pr.||2,5||1,8||-1,0||-0,9||2,7||2,5||-0,9||1,7||2,0|
|Consumption of households||growth in %, const.pr.||0,9||0,5||-2,1||0,1||1,6||1,4||0,1||0,6||1,5|
|Consumption of government||growth in %, const.pr.||0,2||-2,7||-1,9||1,6||1,9||1,6||1,6||0,8||0,7|
|Gross fixed capital formation||growth in %, const.pr.||1,0||0,4||-4,5||-3,5||4,1||3,5||-3,5||2,7||2,0|
|Contr. of foreign trade to GDP growth||p.p., const.pr.||0,6||1,9||1,7||-0,3||0,6||0,5||-0,3||0,5||0,6|
|Contr. of increase in stocks to GDP growth||p.p., const.pr.||1,0||0,1||-0,1||-0,2||0,0||0,2||-0,2||0,2||0,1|
|GDP deflator||growth in per cent||-1,6||-0,9||1,6||1,9||1,8||1,3||1,9||1,8||1,7|
|Average inflation rate||per cent||1,5||1,9||3,3||1,4||0,6||1,7||1,4||1,0||2,3|
|Employment (LFS)||growth in per cent||-1,0||0,4||0,4||1,0||0,5||0,2||1,0||0,2||0,2|
|Unemployment rate (LFS)||average in per cent||7,3||6,7||7,0||7,0||6,4||6,1||7,0||6,8||6,6|
|Wage bill (domestic concept)||growth in %, curr.pr.||0,8||2,2||1,8||-0,9||2,8||3,8||-0,9||1,8||3,5|
|Current account / GDP||per cent||-3,9||-2,7||-1,3||-1,4||0,4||0,0||-1,4||-0,4||-0,3|
|Exchange rate CZK/EUR||25,3||24,6||25,1||26,0||27,4||27,4||26,0||27,3||27,2|
|Long-term interest rates||% p.a.||3,7||3,7||2,8||2,1||1,9||2,4||2,1||2,4||2,6|
|Crude oil Brent||USD/barrel||80||111||112||109||108||104||109||105||101|
|GDP in Eurozone (EA-12)||growth in %, const.pr.||1,9||1,6||-0,6||-0,4||1,1||1,6||-0,4||1,1||1,5|
- Risks to the Forecast - July 2014 (.PDF, 81 kB)
- A - Forecast Assumptions - July 2014 (.PDF, 388 kB)
- B - Economic Cycle - July 2014 (.PDF, 208 kB)
- C - Forecast of the Development of Macroeconomic Indicators - July 2014 (.PDF, 182 kB)
- D - Monitoring of Other Institutions Forecasts - July 2014 (.PDF, 109 kB)
Tables and Graphs
- Tables and Graphs - July 2014 (.PDF, 372 kB)
- C.1 - Economic Output - July 2014 (.PDF, 164 kB)
- C.2 - Prices - July 2014 (.PDF, 161 kB)
- C.3 - Labour Market - July 2014 (.PDF, 152 kB)
- C.4 - External Relations - July 2014 (.PDF, 150 kB)
- C.5 - International Comparisons - July 2014 (.PDF, 140 kB)
Macroeconomic Forecast in a Nutshell
Structure of the presentation
Summary of the Forecast
Risks to the Forecast
Monetary Policy, Financial Sector and Exchange Rates
Position within the Economic Cycle
Business Cycle Indicators
Forecast of the Development of Macroeconomic Indicators
Monitoring of Other Institutions’ Forecasts
Tables and Graphs
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 - July 2014 (.ZIP, 335 kB)
- To run, the application requires Microsoft Excel 2010 or Microsoft Excel 2007. Macros need to be enabled.
- Updated: 28.7.2014
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 4 July 2014. No political decisions, newly released statistics, or world financial or commodity market developments could have been taken into account after this date.