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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Spotlight issue
Company-wide holidays mixed up July’s statistics
Economic confidence has remained favourable and positively influenced both industrial activity and construction yoy dynamics in July. Company-wide holidays, however, pulled industrial growth down on a monthly basis. In July, the trade balance ended in its first deficit since the beginning of the year. Wage growth eased in the second quarter, but it remains very strong and propels core price growth. Headline inflation should print a strong 2.5%.
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CNB to complete hat-trick in September
Despite the CNB hiking rates twice over the summer, the koruna remains rather weak while core inflation is accelerating on the back of rising wages. The CNB’s forecasts assume one more hike in the third quarter, and the market has already priced it in. We expected a hawkish outcome from the latest CNB meeting that would see the koruna strengthen. However, although the bank’s short-term outlook did prove hawkish, the FX market has not reacted. We change our CNB call in accordance with the market view of September hike. We still expect another hike in November.
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Strong demand for industrial space continues in Czech Republic
CBRE, a global leader in real estate services, released its latest industrial rental space market quarterly report. Vacancy rates remain very low below 4 % and more than half of space currently under construction is already pre-leased. Net demand is driven mainly by manufacturing companies.
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