The outlook for 2024 remains subdued. The Czech Banking Association has revised its forecast in light of the weak European economy, though it anticipates some positive momentum from rising wages and consumption.
According to the latest forecast by the Czech Banking Association (ČBA), economic growth in the Czech Republic will be lower than initially expected next year. The growth estimate has been revised down by almost half a percentage point, with the association now predicting a 2.3 percent increase in gross domestic product (GDP). This year, the Czech economy is expected to grow by around one percent due to the weakened industrial sector in Europe, especially in Germany.
The revision of the forecast is mainly attributed to slower-than-expected growth in Europe. “The weaker expectations are mainly due to the even more sluggish development abroad. The German economy, in particular, faces economic and structural challenges, which is also slowing the recovery of the domestic economy,” said Jakub Seidler, Chief Economist of the Czech Banking Association, to ČT24.
Despite the overall weak outlook, banks are optimistic about wage growth, which could support stronger consumption. They estimate that private household consumption—previously a drag on growth—could now become a primary driver of economic expansion.
One factor that may continue to impact inflation is food prices, which, according to recent data, are no longer falling. On the other hand, fuel prices remain relatively low, which should help dampen inflation.
Czech financial institutions agree that GDP growth will reach around one percent this year. The Ministry of Finance is the most optimistic for next year, forecasting GDP growth of 2.5 percent. Opinions also vary on the outlook for the Czech koruna: while the central bank expects a weaker koruna, the Ministry of Finance and the banks anticipate a slight appreciation.
