In the previous forecast, the commission expected growth of 3.9 percent in the summer. For next year, the EC has only slightly adjusted the forecast. Instead of the original 4.5 percent, it now expects growth one tenth of a point weaker.
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According to the commission, the continuing shortage of some raw materials and important materials may have an impact on the deterioration of the estimate. This may affect the production and exports of the automotive industry, which is of key importance to the Czech economy.
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According to the commission, the growth of the Czech economy will be driven primarily by household consumption, which will remain high due to the continuing stable situation on the labor market. According to the commission’s forecast, unemployment in the Czech Republic will remain one of the lowest in the entire EU at 2.7 percent. In contrast, inflation will exceed the EU average and, according to the commission, will reach 3.3 percent this year.
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Especially due to the expected further rise in energy prices at the beginning of next year, the EC expects inflation in the Czech Republic to rise slightly next year as well, reaching 3.4 percent. Then prices should start to fall.
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In its new forecast this week, the Czech Ministry of Finance worsened its estimate of economic development for this year and next. It expects GDP growth of 2.5 percent this year and 4.1 percent next year. In the new forecast from last week, the Czech National Bank (CNB) also worsened the estimate of economic development for this year and next. It expects growth of 1.9 percent this year and 3.5 percent next year
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Growth in the EU will be faster
On the contrary, according to the EC, the European Union’s economy will grow faster than originally expected this year, mainly due to the successful recovery from the coronavirus crisis. The EC has improved its estimate of the growth of gross domestic product (GDP) of the EU countries to five percent. It expected growth of 4.8 percent in the summer.
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However, the EU executive sees risks in the scarcity of some resources and in rapidly rising prices, especially energy. For this reason too, it expects economic growth of 4.3 percent next year, which is two tenths of a point less than expected in the previous forecast. The commission estimates a similar development as in the 27-year-old this year and next for 19 euro area countries. There it expects growth to the same extent.
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