The economy of Czechia is a market economy strongly oriented towards foreign trade. The vast majority of Czech exports go to European Union countries [4]. Russia's share of Czech exports fell in one observed period to 1.7 per cent, whereas in 2012 it came to almost four per cent [4]. In the same period exports to Russia decreased by 12 per cent year on year and imports from Russia to Czechia dropped by 40 per cent, according to data from the Czech Statistical Office [4].
Economic growth and inflation in 2015
In the third quarter of 2015, Czech real gross domestic product grew by 0.7 per cent quarter on quarter and by 4.1 per cent year on year, exceeding the four per cent mark for the third quarter in a row, according to the January macroeconomic forecast of the Ministry of Finance [1]. Growth was driven mainly by manufacturing, construction, and trade and transport [1]. In January 2016 the Ministry of Finance revised its estimate of GDP growth for 2015 to 4.6 per cent [1]. According to the ministry, part of the growth was caused by one-off factors, in particular the drawdown of European Union funds from the 2007–2013 programming period, with an estimated contribution of 0.8 percentage points, and the fall in the koruna price of oil, with a contribution of 0.9 percentage points [1].
The inflation rate for 2015 reached 0.3 per cent, the lowest since 2003 and the second lowest value in the history of the independent Czech Republic [1]. The unemployment rate according to the labour force sample survey fell in the third quarter of 2015 to 4.8 per cent, the second lowest value in the European Union after Germany with 4.4 per cent [1]. The current account surplus of the balance of payments for 2015 probably reached 1.2 per cent of GDP, the highest in the history of the independent Czech Republic [1].
Public finances in 2015
According to the fiscal outlook of the Ministry of Finance from November 2015, investment by the general government sector in 2015 reached its highest level since at least 1995, even after taking into account the costs of leasing JAS-39 Gripen fighter aircraft, exceeding the highest pre-crisis level by more than ten billion koruna [2]. In 2015, for the first time in the history of the Czech Republic, government bonds with a negative yield were sold on the primary market: on 28 August 2015 these were medium-term bonds with a yield of −0.001 per cent in a volume of almost 4.2 billion koruna [2]. For issues maturing in 2017, the yield reached −0.212 per cent on 11 September 2015 at a volume of 16.6 billion koruna, and −0.323 per cent on 14 October 2015 at a volume of 9.2 billion koruna [2]. In the auction of 11 November 2015, medium-term and long-term government bonds with a total nominal value of 11 billion koruna were placed at an average yield of −0.332 per cent [2]. In 2015 the coalition government agreed on a state budget deficit for 2016 of 70 billion koruna [2].
Developments in 2022
In its April 2022 macroeconomic forecast, the Ministry of Finance estimated that growth of the Czech economy would slow to 1.2 per cent and inflation would reach 12.3 per cent, whereas its January forecast of the same year, issued before the Russian invasion of Ukraine, had assumed growth of 3.1 per cent and inflation of around ten per cent [3]. The economy grew by 3.3 per cent in 2021 [3]. Finance Minister Zbyněk Stanjura (ODS) described the estimate as burdened by "extreme uncertainty" and said that a twenty per cent rise in energy prices in the second half of the year would, according to the ministry's models, cause a one-percentage-point increase in average inflation [3]. The ministry expected inflation to peak in the second quarter of 2022 above 13 per cent and to slow to 4.4 per cent in 2023 [3].
According to Minister Stanjura, the war in Ukraine, together with inflation, was to cool household consumption, which grew by 4.4 per cent year on year in 2021, while for 2022 the ministry estimated growth of only half a per cent [3]. Stanjura confirmed that the new estimate would require an amendment to the state budget, which the government planned to submit by the end of June 2022 [3]. In connection with the refugee crisis he said that roughly 325,000 refugees from Ukraine were registered in Czechia at that time, and estimated the cost of their stay at approximately two billion euros, or about 50 billion koruna, which the government planned to cover partly from European funds [3].
Governor of the Czech National Bank Jiří Rusnok, commenting on the slowdown in growth, said on Czech Television that the bank "will be glad of a black zero (a balanced budget) already at the end of this year" [3]. At the end of March 2022 the Hospodářská komora České republiky published an estimate of economic growth of 1.2 per cent, identical to that of the Ministry of Finance [3].
Sources
- Ministerstvo financí ČR — 29 January 2016
- Ministerstvo financí ČR — 30 November 2015
- Hospodářské noviny — 1 April 2022
- Česká televize