Czech economy may start growing in 2021

The Czech economy may start growing in 2021, mainly thanks to this year's low comparison base, but the jobless rate will rise as well, with the situation next year to depend on how the fight against the coronavirus unfolds, a CTK poll of employer associations shows.

The economy may grow next year but it will take some time before it returns to the 2019 level, the Confederation of Industry's economic policy section head Bohuslav Cizek said. Given this year's extremely low comparison base, Czechia may post robust growth in 2021, Chamber of Commerce spokesman Miroslav Diro said, adding that it may surpass the growth dynamics seen in 2018 and 2019. However, such development is uncertain and dependent on factors beyond businesses' control, he said.

As the coronavirus crisis has hurt Czech firms' investment activity, some sectors are likely to show slowdowns in digitisation and innovations in the short term, he added. Some 25 percent of Chamber of Commerce members are doing the same as or better than before the crisis, which is good news, according to Diro.

More than 50 percent expect their businesses to recover within two years at the latest and most frequently in one or two years, he said. The entire Czech economy is not likely to reach the 2019 level before 2022, he added.

Some 30 percent of businesses expect to see a drop in the number of orders in Q1, which is twice as many as a year ago, Cizek said, referring to a joint survey carried out by the Confederation of Industry and the Czech National Bank (CNB). The situation in 2021 will also depend on the government's coronavirus measures, he said, adding that the measures should boost the stability of the business environment, not discriminate, and promote investments.

The jobless rate may be around 3.5 percent in 2021 and businesses will continue struggling with a lack of employees in specific and qualified professions, according to Cizek. The Organisation for Economic Co-operation and Development (OECD) expects the Czech economy to recover slowly and reach the pre-crisis level at the end of 2022, the OECD said in early December. The Finance Ministry's September forecast puts the 2021 expansion at 3.9 percent. The CNB's November forecast envisages 1.7 percent growth in 2021. According to the CNB, Czechia will not reach the pre-crisis level at the end of 2022 either.

Source: ČTK