According to the economists represented in the panel, current CZSO data on GDP growth confirm that there is a gradual recovery of the domestic economy.
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According to the CBA, this was mainly due to growing household consumption and still high government consumption. Investments behind these two components are “lagging behind”, the CBA said.
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“During the year, however, all three components should contribute to GDP growth in a balanced way. The contribution of net exports to growth will lag behind them this year due to accelerating imports, ”added the CBA.
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According to the CBA, the average unemployment rate should reach four percent next year. In 2022, economists then expect a decline to 3.6 percent. This is half a percentage point lower unemployment than expected in the May estimate.
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Deficit well above EU requirements
According to the current estimate, the general government deficit should amount to 7.3 percent of GDP. Public debt will rise to 43.5 percent of GDP, economists in the panel expect.
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“The impact of a sharp shortfall in revenues without the adoption of sufficient measures on the expenditure side will not make it possible to reduce the general government deficit below 4.6% of GDP in 2022 (which is not a value that corresponds too much to the continuing boom),” the CBA added.
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According to the Maastricht criteria, the share of government debt in GDP must not exceed 60 percent. The Czechia still comfortably meets this limit. Furthermore, according to them, the deficit must not exceed three percent under standard conditions. The Czech Republic, like many other countries, failed to do so last year.
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However, last year, due to the coronavirus emergency, the European Commission (EC) declared that states could temporarily violate these strict conditions.
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