CNB Revises GDP Growth Forecast Downward On Trade Concerns


Prague, Aug 2 (CTK) – The Czech National Bank (CNB) in its new forecast worsened a GDP growth estimate for 2018 to 3.2 percent from its May prediction of 3.9 percent, and for next year its estimate stayed at 3.4 percent, CNB governor Jiri Rusnok told journalists after the governing board’s meeting.


For 2020, the CNB envisaged a 3.3 percent economic growth.


The central bank raised its inflation estimate for the third quarter of next year to 2.1 percent, while in May it predicted 1.8 percent, and for the fourth quarter of 2019 it increased its estimate to 2 percent from the previous 1.9 percent.


Risks to the predicted development have been balanced, Rusnok said. There is uncertainty about the speed with which the negative sentiment affecting the crown’s rate will fade away and about protectionist measures in global trade. A short-term risk slowing the consumer price hike can be an outlook for food and fuel prices for the next few months, the central bank said.


The CNB expects the average exchange rate of the crown to reach Kc25.50 per euro this year and to firm to Kc24.60 versus the euro next year.


In May, the CNB envisaged the crown’s rate at Kc25/EUR and Kc24.40/EUR in 2018 and 2019, respectively.


In 2020, the crown should appreciate to Kc24.20 against the single currency.


Global effects may persist in the next two quarters, and the end of the year will see resumption of the crown’s gains, Rusnok said. However, it cannot be ruled out that the crown will start appreciating sooner. “Uncertainty of markets is quite big and their fluctuation is caused by statements about trade policy, he added.


In its new forecast this week, the Finance Ministry downgraded economic expansion prediction to 3.2 percent this year and 3.1 percent next year.


The Czech Banking Association said last week the economy would increase by 3.3 percent this year and by 2.9 percent next year.