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
Inflation hit 6%; without the VAT waiver on energy it would be 7%
Inflation rose in November in line with market expectations, but well above the Czech National Bank's forecast. Price increases were driven by fuel and food, while housing costs fell due to the waiver of VAT payments on energy. Without it, inflation would be 7% yoy. We expect the CNB's repo rate to increase to 3.25% in December and 3.75% in February.
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Czech wages increased by 5.7% yoy in 3Q21
Czech average wage growth slowed from 11.4% yoy in 2Q to 5.7% yoy in 3Q. This was due to the higher base of 3Q20, when the economy had already partly recovered, as well as to the fading effect of the second round of extraordinary bonuses paid in health and social care in 2Q. However, elevated inflation significantly downsized real wage growth, which was only 1.5% yoy in 3Q.
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3Q economic growth of 1.5% qoq fostered by household consumption
The second reading of Czech GDP for 3Q has brought a slight upward revision. The figure was increased to 1.5% qoq from the previous estimate of 1.4%. The qoq rate of growth was thus similar to 2Q’s 1.3% qoq. Given the problems faced by industry, we consider this a very good result. Due to a higher base effect, yoy GDP growth slowed from 8.5% to 3.1%, as 3Q20 was already marked by a partial economic recovery. Economic activity is still about 2.5% below the pre-crisis 2019 level.
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