Czech Republic: Sharp fall in inflation

Real GDP is contracting, largely reflecting a specialisation in export-dependent manufacturing. Falling investment and recession in major export markets are contributing to a sharp downturn this year, followed by a weak recovery in 2010, driven by the gradual pick-up of private consumption and export demand.

Inflation is set to fall sharply, reflecting both the global recession and slower growth of administered prices.

The government has responded to the downturn with two stimulus packages, but there is little room for further discretionary fiscal easing. Monetary policy has been relaxed gradually since August 2008, and additional interest rate cuts are possible. Measures to ease the regulatory burden on business could also reduce the pressure on the enterprise sector without raising the fiscal deficit.

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©OECD Observer No 274, July 2009

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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