The Czech unemployment rate increased slightly in May, but this does not mean that the labour market is immune to the economic fallout from the pandemic. This slight increase is probably the result of government measures, but once these measures end, we're likely to see an increase in the months ahead.

At the end of last year, average wage growth was slower than initially estimated and growth decelerated further in 1Q this year. The economic recession will bring about an increase of unemployment as companies try to lower the costs of wages. This year, the average real wage will probably increase only marginally. Household consumption will remain sluggish. The CNB will probably cut the key interest rate to technical zero.