Next year, GDP growth should accelerate to 2.7%. Inflation will hover around two percent for both years. Real wages are expected to increase annually at a rate of about 4%. According to the ministry, economic growth in the eurozone will be weak this year as well, but could accelerate to 1.3 % next year. The August prediction is more optimistic than the one presented  in April. "After last year's stagnation, the economy will grow slightly this year. I consider the fact that unemployment in the Czech Republic will remain at a record low within the EU and that real wages will rise more significantly than we expected in April to be good news, also thanks to the drop in inflation," believes Minister of Finance Zbyněk Stanjura. "Next year, we expect an even better performance of the entire economy. This will continue to reflect the growth of real wages, and to this will be added both higher investments by the state and the private sector," adds Stanjura. After last year's stagnation, the gross domestic product should increase by 1.1 % this year. The driving force is revived private consumption, which, in addition to growth in real wages, is also supported by households' greater willingness to spend. The consumption growth of the government institutions sector should slow down, among other things in connection with the consolidation of public finances. Investment activity will be dampened by lower spending not only by the private sector, but also by the government sector – the transition between financial perspectives for EU cohesion funds will have a negative impact. The change in inventory levels will continue to hold back economic growth, although not as strongly as last year. The balance of foreign trade should have a positive effect on GDP growth, primarily in connection with the weakening of import-intensive components of domestic demand. In 2025, the Czech economy should grow by 2.7 % thanks to stronger consumption and investment dynamics and more favorable economic developments abroad, but a more robust revival of domestic demand will also support imports. At the beginning of this year, year-on-year inflation came back close to the Czech National Bank's two percent inflation target after three years, and should remain within the tolerance zone for the rest of the year. Domestic demand pressures are dampened by increased currency rates, which is additionally contributed to by the restrictive effects of budgetary policy. Pro-inflationary foreign supply factors also weakened significantly. According to the prediction, the average rate of inflation could thus fall to 2.4% in 2024 and up to 2.3% in 2025.

Source: www.businessinfo.cz

Compiled by the Dutch team of CzechTrade