Employers expect economy will grow by 3 to 4 pct next year

Czech economy will grow by 3 to 4 percent next year, that is moderately slower than this year, representatives of employers said in CTK's survey.

Unemployment will stay record-low, which will further raise interest of companies in employees and boost investments in modernisation of technologies and robotisation.

"The growth trend of the Czech economy should continue also next year even when not as strongly as this year. Real GDP growth will reach 3.6 percent, according to our forecasts. Overall, this means a significantly favourable economic development," Chamber of Commerce analyst Karina Kubelkova told CTK.

The Confederation of Employers' and Entrepreneurs' Associations expects a GDP growth between 3 and 4 percent in 2018 and inflation is to reach around 2 percent. Unemployment will remain at a record-low level. The Chamber of Commerce puts it at around 3 percent, the same as for the year 2017. "Companies will thus have big difficulties to find qualified employees also next year," Kubelkova added.

Growing wages (a year-on-year nominal rise by 8.6 percent) will manifest themselves also in increasing prices of production, which will be pushing up inflation, she forecast. The Chamber of Commerce expects the Czech National Bank (CNB) to raise interest rates several times next year and inflation to be near the upper level of the CNB's inflation target (2.9 percent).

Strong domestic demand will also support higher inflation next year. With respect to the situation on the labour market, companies will invest more next year than in 2017, in particular in new technologies and robotisation. This will cause a growth in the productivity of labour. The Czech economy will continue converging with the euro area's advanced countries, Kubelkova remarked.

Bohuslav Cizek of the Confederation of Industry recalled that this year was record from the point of view of economic growth and no turnround is likely at the end of the year. Inflation will most probably be higher than in the previous year but will still stay within the tolerance band. "We expect industry to keep growing next year even when the fight for employees and suppliers is getting tougher and companies have problems to satisfy demand due to a lack of workforce," Cizek remarked.
"With respect to the significant growth seen in the last few months, we believe that the figures at the beginning of the year will probably be a bit lower, be it GDP growth or further increase in employment," he added.

According to a regular survey of the Finance Ministry based on forecasts of 14 domestic institutions and estimates of analysts, the growth of the Czech economy should slow down to 3.3 percent next year from this year's expected 4.4 percent.
At the same time, thanks to the crown's firming, average inflation will drop to 2.3 percent from this year's 2.5 percent. Unemployment will fall a bit further and wages will keep the high growth pace.

Source: CTK