However, the fall for this year left the monetary fund unchanged in the case of the Czech economy. As in April, it expects GDP to fall by 6.5 percent due to the effects of the pandemic.
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“The decline in the Czech Republic’s GDP by 6.5 percent may prove to be a relatively good estimate for this year, but there is a risk that the overall decline may be slightly stronger due to various restrictions related to coronavirus,” said Generali Investments analyst Radomír Jáč.
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Neighboring Germany, our main trading partner, will fall by 6 percent this year, according to the IMF. This is an improvement in the estimate, originally expected to decline its economy by 7.8 percent. Next year, Germany is expected to grow by 4.2 percent. In this case, the IMF worsened the estimate, as our western neighbor was expected to grow by 5.4 percent.
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Neighboring Slovakia has significantly improved its growth estimate for next year from five percent to 6.9 percent. However, the IMF reduced Slovakia’s estimate for this year from a decline of 6.2 percent to a decline of 7.1 percent.
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In the September forecast, the Ministry of Finance expected a decline of 6.6 percent, while the Czech National Bank (CNB) forecast an economic decline of 8.2 percent in the August outlook.
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Growth is not driven by industry, economists correct
The Czech government has taken new restrictive measures in recent days. They have closed zoos, cinemas, swimming pools and fitness centers. Restaurants, pubs and primary schools are also closing on Wednesdays.
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These measures will have an undeniable impact on the economy. Nevertheless, the President of the Republic Miloš Zeman questioned the fact “that economic growth is related to gyms” over the weekend, and Minister of Finance Alena Schillerová (for YES) told Czech Television that industry “has the largest share in GDP”.
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However, economists pointed out that services, such as gyms, swimming pools and restaurants, now make up 60 percent of the Czech gross domestic product (GDP) and that industry accounts for only 36 percent of the economy.
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