Cooling of the economy

editor: REMIX NEWS
via: euro.cz

The recent decrease in economic growth looks like a dramatic change, especially when we see that the Hungarians and Slovaks are still growing at a level above four percent. It is, however, necessary to look at it a little soberly that an outlook of a year’s growth of over three percent is more than realistic. However, there are two possible problems, the moves of Andrej Babiš and Czech National Bank (CNB).

The Czech economy has met its limitations. With full employment, it is simply impossible to increase production as fast as in the last two years. Moreover, if the growth of the Czech economy continues between two and three percent a year in the nearest future, it would be all right.

The two problems are, however, Andrej Babiš and his generosity in setting the state budget expenditures and the excessive increase of the number of state employees who are absent on the labor market, and the CNB’s moderation in raising interest rates. Negative interest rates after overcoming the economic cycle are not optimal.

If there is anything to deduce from the latest statistical data, it should be a more realistic fiscal policy and a faster normalization of monetary policy.


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