Research Detail
| 2022/11/11 / Erste Group Research |
A mild recession is expected The Czech economy is now probably going through a mild recession, which is mainly caused by the subdued development of household consumption, but in the coming months, the weakening of foreign demand will probably also be added. In this respect, we newly expect GDP growth to stay negative in the q/q terms in 1Q23 affecting the overall expected GDP figure for 2023 (-0,5%). Although labor market is deteriorating, mainly due to a temporary drop in real wages, the unemployment rate should increase only very slightly. In 2H23, there should already be a gradual revival of the of economic activity. Although the uncertainty surrounding the development of energy prices is considerable, inflation should begin to slow down from January. The return towards the inflation target will take a little over a year. The CNB is keeping its main rate at 7%, and although a further rate hike cannot be ruled out, we now see rate stability until August as the most likely scenario. The CNB also continues to defend the koruna through foreign exchange interventions. For the next two years, we expect only a very slight strengthening of the koruna. |
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General information
| Author | Erste Group Research |
| Date | 2022/11/11 |
| Language |  |
| Product name | CEE Country Macro Outlook |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Czech Republic |
| Currency in focus | Czech Koruna |
| Sector in focus | - |
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