Macroeconomic Forecast Czech Republic

We have revised up our forecast for unemployment in the Czech Republic to end 2012 at 7.7% from 7.6% previously. We expect average joblessness rate to come in at 7.9%, down slightly from our forecast for a 2011 average unemployment rate of 8.5%. The jobless rate ticked up in November to 8.0% after having fallen slightly to 7.9% in October. Given our view for a slowdown in industry on the back of lower external demand mainly out of Germany, we believe that new employment in this important sector will stall in the beginning of the year.

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