Economic policy / Macroeconomic Indicators, Economic Growth
This section reports on economic policy initiatives of the Czech government, the EU, and other entities that have a direct impact on the competitiveness of the country. It also includes information on economic priorities of the AmCham and other leading associations.
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Profit margins decline, households increase savings
As a result of the coronavirus pandemic, the Czech economy contracted 3.4% qoq in the first quarter, i.e. one-tenth more than originally expected. In a year-on-year comparison, the result did not change and the economy fell 2%. Fixed investment followed by household consumption contributed most to the qoq decline. The quarter-on-quarter decline in the dynamic was only partially offset by higher government consumption and higher net exports.
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CSOB: Germany vs. Slovakia: Which demand helps the Czech economy more?
According to CSOB bank analysts, investors in the markets believe that governments are doing big things to restart the economy. And partially, they are right. Public finance deficits in the largest European economies, similarly to the Czech Republic, may reach around 10% of GDP this year. The problem is that behind much of the deficit there will be the net drop in tax revenue or measures to keep the temporarily “unemployed employees” at work – i.e. a smarter form of unemployment benefit. This does not mean that these measures do not count.
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Central and Eastern Europe: The worst seems to be behind us
CEE economies are bracing themselves for a slow recovery. But as unemployment is set to rise and high inflation isn't an issue any longer, more monetary easing is on the way. In FX, RUB prospects remain bright while CZK remains our favourite CEE low yielder. Poland central bank's aggressive steps should translate into a further steepening of PLN swap curve.
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