Czech GDP to fall by 7.6% this year, grow by 5.8% in 2021

Czechia's GDP will shrink by 7.6 percent this year due to the coronavirus pandemic but will rise by 5.8 percent in 2021, according to the Finance Ministry's regular survey of macroeconomic forecasts issued by 13 domestic institutions.

The Czech economy should grow by about 2.5 percent in 2022 and 2023, the ministry added.

"With the exception of general government consumption, all components of domestic demand should decrease this year and the foreign trade balance should also contribute negatively to GDP developments," the Finance Ministry said in the report. "Both domestic and foreign demand should contribute to the recovery next year," it added.

The survey shows Czechia's inflation rate should amount to 2.7 percent on average this year and drop to 1.6 percent in 2021, the report said. Prices will be growing at a slower pace due to falling oil prices and weakened domestic demand, the ministry said, adding that the inflation rate will be around 2 percent in the subsequent years. The institutions expect wage growth to slow down substantially to 1.6 percent in 2020 from last year's 7.1 percent.

The ministry's survey was based on the forecasts provided by the Finance Ministry, Industry and Trade Ministry, Labour and Social Affairs Ministry, Czech National Bank, Akcenta CZ, CSOB, Deloitte Czech Republic, Generali Investments CEE, Institute of Economic Studies at Charles University's Faculty of Social Sciences, Komercni banka, Raiffeisenbank, Confederation of Industry of the Czech Republic, and UniCredit Bank. The survey additionally included the European Commission's May forecast and the International Monetary Fund's April forecast.

The Finance Ministry's April forecast expects Czechia's GDP to drop by 5.6 percent this year. The Czech National Bank projects an 8 percent slump, and the European Commission a 6.2 percent decline. The International Monetary Fund expects the Czech economy to contract by 6.5 percent. Last year, Czechia posted a 2.5 percent GDP growth.

Source: ČTK