Macroeconomic Forecast Czech Republic

May 2008 | Macroeconomic Forecasts

Unemployment continued to edged down in March, with the jobless rate standing at 6.1% down from 6.3% the previous month. Though the Czech Republic has passed its economic peak, with real GDP growth forecast to slow to 5.0% in 2008 (down from 6.5% in 2007), we expect growth to average a still robust 4.6% through to 2012. This will ensure the sustained demand for labour over the medium term, which will help drive the progressive tightening of the labour market. Indeed, we expect the jobless rate to contract to 5.5% in 2008 (from 6.0% in 2007) and to remain around 5% over our five-year forecast period. We caution that with the labour market remaining tight and wages continuing to grow, inflationary pressures will remain a persistent problem for the Czech economy.

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