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
Effective Restrictions Against Covid Could Pay For Themselves
The Czech government has announced new restrictive measures to stop the rapid spread of Covid-19 in the country. Not surprisingly, we are witnessing a heated debate on this issue. A study on restriction costs by CERGE-EI is showing that effective temporary restrictions are the best way to protect public health and the economy.
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Underlying recovery is still with us
Although we expect the underlying recovery to continue, the data in the Czech Republic are likely to show some weakness in August. We believe that to a large extent this was caused by the holidays. We expect to see the recovery continue in September. The first release of GDP for the third quarter should point to a faster-than-expected recovery. Inflation for September should ease in mom terms but increase in yoy terms due to the base effect.
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CNB stays on hold as expected but acknowledges risks
As broadly expected, the CNB left monetary policy unchanged at today's board meeting. The latest economic developments were seen as not diverging from those outlined in the latest CNB forecasts. CZK weakening was again called a natural stabiliser. We expect policy rates to remain unchanged until 1Q22. If the CNB sees the need to loosen monetary policy, we think it would do so by CZK devaluation.
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