Macroeconomic Forecast Czech Republic

Czech consumer sentiment ticked up to -16.0 and -17.0 in May and June, respectively, after averaging -25.5 over January-April. Similarly, business sentiment rose to -8.1 and -9.0 in the same respective two months, compared to -10.3 averaged over the first four months of the year. These modest improvements in households' and firms' assessments of the Czech economy's health may bode well for the slowing of the economic contraction in H209. However, we also caution that such surveys are likely indicative of the fact that aggregate demand has already become so weak that consumers and businesses struggle to see how conditions could become worse going forward. Moreover, we note that the June figures were worse than those seen in May, and caution that economic sentiment could yet take another significant leg down.

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