Czech economy likely to grow 2.9 pct in 2017, foreign and domestic demand to drive growth

The Czech economic growth is expected to accelerate again in 2017 after it slowed down in the prior year. According to an Erste Group research report, the economy is likely to accelerate to 2.9 percent this year from 2016’s 2.3 percent.

The growing foreign demand, owing to the economic improvement in the euro area, and strong domestic demand, which is due to tight labor market conditions and upbeat economic sentiment, would be mainly driving the Czech economic growth this year. The risks are likely to be skewed a bit towards higher GDP growth because of a favourable foreign demand and lower economic and political risks in the euro area and Czech Republic.

All GDP components are expected to add positively to the headline figure in 2017 and 2018. Owing to the rebound in euro area’s economic growth, the contribution of net exports became the most vital one in the first quarter of 2017, followed by household consumption and government consumption.

Only the contribution of investment was negative. A similar development is expected to continue in the quarters ahead, with the exception of investment expenditures that will turn into positive figures as their private components reacts to the foreign demand rebound and their public component will also improve, added Erste Group.