Economic Outlook: Investment strikes back
31.10.2017Company: Amcham
Czech economy accelerates: The Czech economy has entered the late expansion phase and GDP growth is accelerating. We expect it to reach its second-fastest pace of the last ten years. Although we see a minor slowdown next year, the expected investment boom should ensure a still decent level of growth.
Wages are set to grow and propel price growth: The shortage of workers is even greater than before. This is feeding wage growth which is keeping pricing pressures strong. Headline inflation should remain close to 2% even in 2018.
CNB will hike once per quarter: The CNB is not set to follow its forecast blindly. We believe it will use the current economic expansion to proceed with rates normalisation. We expect it will hike once per quarter until the end of 2018.
The koruna will continue its long-term appreciation trend: The exchange rate should break the level of EUR/CZK25 by end 2018. We expect the ongoing normalisation in the forward market to continue.
Increase in government spending and investment: Next year, the economy is set to see further fiscal stimulus, as the central government budget deficit is targeted at CZK50bn, and an even deeper deficit is possible. Bond yields and CZK IRS are set to increase further in 2018.
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Tags: Economics | Finance |
