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
AmCham held regular Macro Intel session with Czech National Bank
Inflation is popping out of the Czech National Bank's target band. Employee expectations are exceeding the wage increases expected and budgeted by employers. The housing market is hurtling ever higher. The danger is that one feeds the other two, and the complex system of the economy begins to hyperventilate as price rises feed wage rises that feed back into price rises.
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Elevated inflation weighs on Czech household consumption
According to the refined estimate, Czech GDP grew by 0.9% qoq in 4Q21. This is fully in line with the earlier preliminary estimate. In year-on-year terms, economic growth accelerated from 3.5% in 3Q to 3.6% in 4Q. However, compared to the pre-crisis fourth quarter of 2019, the level of economic activity was still 1.9% lower.
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Inflation peaks close to 10%
At the beginning of the year, inflation accelerated to 9.9% yoy. This was slightly above market and CNB expectations, but fears of a much higher price growth did not materialise. According to our preliminary estimate, core inflation, on the other hand, is slightly lower than expected, which reduces the need for further tightening of monetary policy. Nevertheless, due to concerns about inflationary expectations and the pass-through of higher energy prices into other items in the consumer basket, we expect a slight increase in the CNB's main interest rate at the next meeting.
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