Petr Dubinsky

Czech Economic Growth Likely To Slow In 2020

Czech economic growth will slow to 2.2 percent next year from an estimated 2.5 percent this year. Likewise, wage growth will slow down, and unemployment will rise slightly. At the same time, inflation should fall, but it is still likely to remain above 2.5 percent. It results from the results of a regular survey of the Ministry of Finance based on the forecasts of 16 domestic professional institutions and estimates of analysts.

Overall the estimates of the Czech economy follow the trend of the Visegrad countries, whose economic situation is still in good shape at present.

Inflation, which will probably be the highest this year from 2012, will be affected by conflicting factors next year. Firstly, it will increase the price of cigarettes and alcohol due to higher excise tax and subsequently in connection with the extension of the electronic register of services (EET) from May the VAT reduction on selected products and services.

According to economists, the situation on the labor market should remain tight next year, which should continue to lead to relatively high wage and salary growth.

Due to the labor market situation, industrial companies, in particular, find a way out of the introduction of digital technologies, such as augmented reality. This allows even educated laymen to perform certain activities for which they are not fully qualified.

In addition to the persisting labor shortage, wage and salary increases will increase the minimum and guaranteed wages, as well as wage growth in the public sector.

Regarding the koruna’s exchange rate, chief economist Generali Investments CEE Radomir Jac believes that next year could be characterized by the strengthening of the Czech currency. The crown could break even the 26 CZK / EUR mark. This year traded on average around 25.70 CZK / EUR. “The crown should be driven by a better mood in global markets linked to the decline of political uncertainties,” he said. In the material of the Ministry of Economics, economists estimate an average exchange rate of 25.40 CZK / EUR next year.