The growth of the Czech economy will approach 4% this year after last year’s record slump. According to the forecast of the European Commission, the gross domestic product of the Czech Republic will increase by 3.9%, and in the next year by 4.5%, despite the harsh spring coronavirus restrictions. The previous May forecast projected growth of 3.4% this year and 4.4% in the next one.
According to the Commission, the unexpectedly high volume of spring investments will contribute to a more favorable development. The economic recovery will be driven this and next year mainly by household spending, the EC expects.
According to the Commission, Czechia, more than many other countries, paid for the unfortunate development of the winter wave of the pandemic, due to which the authorities introduced unprecedented restrictions. Because of them, GDP fell by 0.3% quarter on quarter, in the first quarter. The economy started to recover from the second half of April, and the mood among consumers and companies gradually began to improve in the country.
According to the Commission, household demand, supported by a relatively stable situation in the labor market and a high level of private savings, should contribute to the recovery this and next year. On the other hand, problems may arise from the limited supply of raw materials and materials, including semiconductors, which may affect the production and exports of the automotive industry, which is crucial for Czechia.
Title image: In this photo taken Sept. 29, 2011 employees work on an assembly line at the Hyundai car plant in Nosovice, northeast Czech Republic. South Korea’s Hyundai introduced last month a third shift at its plant near the northeastern Czech town of Nosovice to be able to produce SUVs and sedans for European markets 24 hours a day. Despite the painful financial turmoil that has engulfed the eurozone and cast uncertainty over world economic growth, there is still plenty of demand for new cars from low-cost plants like the one at Nosovice. (AP Photo/Petr David Josek)