Our prediction: Czech economy will expand by 3 pct in 2019

Czech employer associations envisage a modest drop in the economic activity, expecting an expansion of over 3 percent next year, with a lack of workers being the main obstacle to a bigger growth of gross domestic product (GDP), the associations said.

Taking into account the Czech Statistical Office methodology, they predict a jobless rate at around 2.4 percent.

The Confederation of Industry predicts a 3.4 percent GDP growth for this year but the real figure may be lower. "Our prediction for this year is based on the Q1 and Q2 figures that are available and on our members' expectations," said Bohuslav Cizek, head of the confederation's economic policy section.

The Chamber of Commerce estimates a drop to 3.3 percent from a 3.6 percent growth this year. Inflation should stay at 2.4 percent. Firms will lack 500,000 workers in June next year, which will harm businesses as well as the entire economy, the chamber said in its analysis.

The state will lose a minimum of Kc84bn this year in taxes and contributions that are not being paid from vacant positions. Next year's losses may reach Kc110bn, the chamber said.

Small and mid-sized enterprises predict, to a great extent, a similar scenario as this year, which means the lack of workers, similar sales and slightly higher costs, Karel Havlicek, head of the Association of Small and Medium-Sized Enterprises, has told CTK.

The association's forecast is an average estimate of major domestic and foreign institutions. For 2019, GDP growth is estimated at 3.0 percent, inflation at 2.3 percent and unemployment at 2.4 percent.

A strong domestic demand is a result of a high employment rate. However, the labour market is tight, and wage growth and rising wage costs are hindering a short-term development, said Cizek.

The latest survey among firms that was conducted by the confederation and the Czech National Bank showed that businesses are influenced by growing prices of energy, materials and raw materials much more than in previous quarters. Prices of electricity increased by more than a quarter over the past six months. Diesel oil and petrol prices have risen by 6 percent.

As much as 42 percent of firms envisage a continued energy price hike, against 14 percent in the third quarter of 2017, Cizek said.

Firms also mentioned higher loan and external financing costs compared to Q2 because of rising interest rates. The cost of a two-year loan has risen by more than 1 percentage point during the past six months, which is over Kc100,000 a year for a loan worth Kc10m.

Businesses said wages would grow by 4.5 percent next year.

Source: CTK

Tereza Řezníčková
section Aktuálně