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2020/06/12 / Erste Group Research

Gradual recovery from 3Q20

GDP growth will arrive at -7% this year. However, from 3Q20 thereafter, we expect a gradual recovery of economic activity, as it will be supported by increasing domestic and foreign demand and the effects of fiscal and monetary policy expansion. In 2021, economic recovery should continue at a higher intensity, mainly due to improved foreign demand. A negative economic shock will affect the labor market this year, leading to rising unemployment and lower wage growth. However, unemployment should not rise so significantly, as the government has launched programs to mitigate adverse effects.

For the rest of this year, the CNB is likely to keep rates stable, due to gradually renewing domestic as well as foreign demand and high inflation, which should not slow down much. We expect the first hike in 3Q21, due to rising inflationary pressures after the crisis. The recent appreciation of the koruna was affected by improved sentiment in markets. In the coming quarters, the koruna should continue gradually strengthening.


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General information

AuthorErste Group Research
Date2020/06/12
Languageen
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusCzech Republic
Currency in focusCzech Koruna
Sector in focus-
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