The Ministry of Finance lowered its estimate of Czech financial development in 2021 from 3.9% to three.1%, following the anticipated decline within the economic system by 6.1% final yr, as acknowledged in the press release revealed by the ministry on January 20. The federal government will due to this fact have to submit a brand new finances for 2021.
In line with its estimate, the general public funds will report a deficit of 5.8% of GDP in 2020 because of the coronavirus pandemic, whereas this yr the deficit is anticipated to rise to six.6% of GDP.
“Due to a strong authorities help to households, corporations, municipalities and the healthcare system, which final yr amounted to five% of GDP, we managed to scale back the financial downturn,” mentioned Finance Minister Alena Schillerova.
“The black eventualities, which predicted double-digit declines within the tense spring or autumn days, didn’t come true. The conservative method of the Ministry of Finance, which works sensitively with information and punctiliously evaluates the obtainable data, is confirmed to be the fitting one,” the minister mentioned.
Due to the anticipated enchancment of the epidemic scenario in reference to the vaccination course of and the anticipated renewed development overseas, the Czech economic system ought to progressively get well in 2Q21 and progressively compensate for the earlier shock to mixture demand and provide.
Though the typical inflation charge reached 3.2% in 2020, year-on-year shopper worth inflation has visibly slowed down in latest months, mentioned the ministry. The decline in shopper demand progressively outweighed the results on the provision facet of the economic system, whereas visibly slowing down meals costs.
This yr, other than the anticipated rise within the worth of oil, important pro-inflationary components needs to be absent and inflation ought to gradual to 1.9% on account of falling unit labour prices and the persistence of a unfavorable output hole.
“Unemployment, regardless of a sure improve, is at a considerably decrease degree than would correspond to the present financial downturn. We’ve got constructed a bridge over which we are going to cross the disaster with out social shocks and make it simpler to get on the trail of financial restoration,” Schillerova added.
In 2020, the internationally comparable unemployment charge in Czechia reached 2.6%. The delayed results of the financial downturn and the gradual discount of measures to keep up employment ought to improve the unemployment charge to three.3% in 2021.