Macroeconomic Forecast Czech Republic

July 2007 | Macroeconomic Forecasts

On the back of ongoing strong real GDP growth, fuelled by robust consumer spending and export growth, the Czech Finance Ministry revised up its 2007 year-end real GDP growth forecast to 5.8% from 5.3%, which is slightly above our updated projection of 5.6%. At the same time, the average 2007 inflation forecast was increased to 2.3% (up from 2.1%), compared to BMI 's 2.6%. Whereas we broadly agree with the ministry's outlook on GDP growth and inflationary pressures, our projections diverge significantly with regards to the country's current account deficit; while the finance ministry estimates a shortfall of 2.1% of GDP in 2007, our year-end current account deficit presently stands at 3.8% of GDP, mainly on the back of surging import demand.

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