Czech economic growth likely to reach around 3 pct in 2018 – Ertse Group Research

Czech economic growth was mainly driven by domestic demand and foreign demand in the third quarter. Household consumption had risen 3.1 percent year-on-year, while government consumption had risen 5.3 percent year-on-year and fixed investments came in at 9.3 percent year-on-year. Meanwhile, the contribution of net exports was negative because if high imports for consumption and investment purposes. Furthermore, the figure was also negatively impacted by a change in inventories, which, together with the relatively low consumption of households, as a main ‘source’ of uncertainty.

“In other words, we expect that GDP growth for 2018 could be revised upwards in future. Due to relatively low figures in 2Q and 3Q, we expect GDP growth in 2018 to reach approx. 3 percent; however, as noted, we expect its future revision upwards. In 2019-20, GDP growth is also expected to come in at approx. 3 percent”, said Erste Group Research in a report.

The Czech economy has been coming back to potential growth from a bit overheated position in the business cycle, mainly because of the monetary policy tightening.

“In the medium term, we expect that the current strong investment activity could, through increases in capacity and productivity growth, increase the potential growth rate closer to a 3 percent growth rate”, added Ertse Bank Research report.