Finance Minister Zbyněk Stanjura (ODS) told journalists on Friday, according to whom households are still struggling with high inflation this year and are therefore reducing their consumption. According to him, the world situation otherwise remains the same, but there is a new risk due to the war between Hamas and Israel, i.e. due to the entire situation in the Middle East.
Next year, there should be a turnaround in the development of inflation: it should fall to 3.3 percent year-on-year, while this year, according to the state’s estimate, it will be 10.8 percent. The Ministry therefore expects that the consumption of households will recover, which will thus start to spend more. “Economic activity will also be supported by private investments and the growth of export markets. The effects of the consolidation package will be moderate – in the range of -0.3 percentage points to GDP growth – and will contribute to reducing inflationary pressures,” the ministry added.
The information comes about a week after the Czech National Bank also worsened the estimates. It expects GDP to fall by 0.4 percent this year, and for next year it is more pessimistic than the MF with an estimated growth of only 1.2 percent. According to representatives of the ministry, the difference is that the state expects higher household consumption (3.9 percent) or a better foreign trade balance.
According to the ministry, macroeconomic prediction is fraught with a large number of risks. “The main downside risk is related to the ability to replace the shortfall in natural gas and oil supplies from Russia to the EU with increased imports from other suppliers,” the agency writes. In addition to the Middle East, the domestic overvaluation of residential real estate may also be a problem.