Macroeconomic Forecast Czech Republic

July 2007 | Macroeconomic Forecasts

Following the Czech PX equity index's stellar performance during the first four months of the year, increasing by more than 16.5%, growth has been somewhat sluggish towards the end of the second quarter, with the bourse rising by just 2.4% in May and 0.4% in June to 1859.10 at the end of the month. From a technical perspective, key support exists at 1800.00 and a break of that level could set up further losses towards 1730.00. Although the market technicals point towards potential losses in the short run, our long-term outlook on the index remains positive on a fundamental basis, as the Czech economy continued to fire on all cylinders in Q107 (increasing by 6.1% y-o-y), mainly driven by private consumption. We believe that economic expansion is likely to remain robust during the remainder of the year, which, in turn, could be supportive of further gains in the stock market.

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