Czech economic growth likely to accelerate to 4.4 pct in 2017, to slowdown in next two years

The Czech economy, in the third quarter of this year, had expanded 5 percent year-on-year. Among GDP components, household consumption and investment expenditures are of most significance. Robust labor market and positive sentiment of households have mainly driven household consumption.

High foreign demand and a lack of available employees, which compels companies to invest more into capital, production automation, drove the investment expenditures. Net exports’ contribution to the economic growth continues to be positive; however lower compared with the earlier two components, as high demand for Czech exports is lowered by the considerable volume of imports for consumption and investment purposes.

“In 2017, we expect GDP growth to accelerate and come in at 4.4 percent, from the 2.5 percent reached in 2016”, noted Erste Group Research in a report.

Even if the economic story of strong domestic and foreign demand is likely to continue in the coming two years, the GDP growth is expected to decelerate and reach 3.4 percent and 2.9 percent in 2018 and 2019, respectively. This development would be impacted by higher interest rates and the Czech koruna’s strengthening. But the expected slowdown is not seen as a negative development, added Erse Group Research.

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