The Czech economy should grow by 2.2% in 2014 recovering from a 1.4% drop estimated for 2013, Oxford Economics said in a new forecast keeping it previous estimate. The growth is seen further gaining speed and reaching 2.9% in 2015 and 3% in 2016.
Major growth drivers this year will be rising foreign demand, fiscal policy easing and currency interventions by the central bank. A pick-up in activity of the country's main trading partners should boost demand for Czech exports in 2014, Oxford Economics said. A continued growth in the key manufacturing industry, evident from the rising PMI index, and improved consumer confidence reflecting expectations for a less restrictive fiscal policy should also support the country's economic growth. Yet, growth will be constrained by the still high unemployment rate, which hit a record-high of 8.6% in January, the weak construction sector and relatively tight credit conditions for businesses.
Oxford Economics evaluates two main emerging risks for the Czech economy: a potential disagreement within the newly-formed ruling coalition that could weigh on growth and uncertainty caused by a change in the central bank's monetary policy. The bank, which launched foreign exchange interventions in
In its risk assessment Oxford Economics said the
GDP, y/y growth
Domestic demand, y/y growth
Exports, y/y growth
Imports, y/y growth
Consumer prices, y/y growth
Govt budget, share of GDP
Current account, share of GDP
Source: Oxford Economics
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