Economic policy
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
April’s production decreased, construction was successful
Industrial production in April disappointed when it grew only 5.5% yoy despite having two more working days. Adjusted by calendar effects, it even declined 0.2%. The second quarter started well for construction. Mainly production in building construction is flourishing because of higher investment activity in the private sector as well as higher construction of residential buildings. The trade balance statistics printed above expectations, showing a surplus that was CZK 3bn higher than a year ago.
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ING Bank Czech Republic: Solid wage growth in Czech Republic
Nominal wages picked up by 8.6% YoY on the back of double-digit public sector wage growth and solid private wage increase. One more reason, why the central bank might hike sooner than expected, ING Bank Czech Republic says. Real wage growth accelerated from 4.7% in 4Q17 and 3.7% for the whole 2017 (after revision) to 6.6% in 1Q18. This is the fastest year-on-year dynamics of real wages since the turn of 2002/2003, i.e. over the past 15 years.
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Inflation back on target despite GDP growth easing
The flash GDP estimate showed only mild growth in the first quarter. The second reading should reveal that domestic demand is behind the growth while external trade curbs its dynamics. April was a successful month for retailers, who after a weaker first quarter gained nice yoy sales growth. An additional two working days supported the dynamics of industrial production, while April´s warmer weather encouraged growth in the construction sector. May’s figures should confirm April’s inflation return. Thanks to higher fuel and food prices, headline inflation should return to the CNB target.
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