The EC also issued an estimate of the growth of the Czech economy, which will stagnate in the first quarter. For the whole year, GDP will increase by 0.1 percent and will be well below the EU average.
According to the commission, the gross domestic product (GDP) of the countries of the European Union will grow by 0.8 percent this year, which is half a percentage point more than the EC predicted in the fall.
At the same time, the EU executive lowered the estimate of inflation in the twenty-seven member countries, which, according to it, will slow down to 6.4 percent this year.
Inflation in the eurozone unexpectedly fell sharply in January
Economic
The previous forecast counted on seven percent. Inflation should not approach pre-crisis values until next year, when, according to the commission’s estimate, it will fall to 2.8 percent. Last year, it reached 9.2 percent.
For the twenty countries of the eurozone, the commission estimates this year’s economic growth at 0.9 percent, while earlier it counted on growth of 0.3 percent. The GDP growth forecast for next year remains unchanged for both the EU (1.6 percent) and the Eurozone (1.5 percent).
According to the commission’s economists, sufficient gas reserves and the related easing of pressure on energy price growth will contribute to a more favorable development this year.
The fact that the EU countries were able to partially get rid of their dependence on Russian energy is also important. The stable situation on the labor market also helps, where unemployment remained at a record low level of 6.1 percent until the end of last year.
The Commission emphasizes that uncertainty remains particularly high due to the ongoing war in Ukraine and will also be related to the extent of the expected recovery of the Chinese economy after the lifting of strict anti-pandemic restrictions. This can then increase inflationary pressures.
The Czech economy will lag behind
As for the Czech economy, according to the Commission’s forecast, it will stagnate in the first quarter of this year and show growth of 0.1 percent for the whole year. This will be significantly below the expected average for the entire European Union.
The Czech economy could return to faster growth next year, when the European Commission expects GDP growth of 1.9 percent. Last year, the Czech economy grew by 2.5 percent.
Contrary to the previous forecast, the Commission reduced the estimate of this year’s inflation by a tenth of a percentage point, which, according to it, will reach 9.3 percent in the Czech Republic. It would thus be the fifth highest in the entire EU after Hungary, Poland, Slovakia and Romania.
Next year, inflation could approach pre-crisis values and fall to 3.5 percent. Last year’s average value of inflation rose to a record 14.8 percent.
According to the commission, one of the causes of the slow growth of the Czech economy will be this year’s stagnation in household consumption, which will be caused by a decrease in the real income of the population. Next year, however, it should again become the main engine of growth.
The CNB increased the inflation estimate
Economic
