The growth of the Czech economy should speed up next year, rising from this year’s 2.5 percent to 3.9 percent in 2022, based on the latest regular Finance Ministry survey.
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In a new prognosis the Czech Ministry of Finance says it expects economic growth of 3.1 percent this year. At the same time officials say that the budget deficit will reach 8.8 percent of gross domestic product in 2021.
Last year the Czech economy was rocked by the coronavirus crisis and shrank by 5.6 percent.
While the Ministry of Finance predicts a 3.1 percent expansion in 2021, others are less optimistic. The Czech National Bank issued an estimate of 2.2 percent growth this year, while the Czech Banking Association has forecast 2.6 percent.
In a paper issued this week, the ministry said it expected that gradual vaccination against Covid-19 would improve the situation surrounding the virus, supporting an economic revival both at home and abroad.
Prime Minister Andrej Babiš (ANO) has followed a recommendation by the finance ministry not to enter the European banking union for now.
A study carried out by the foreign ministry recommends monitoring the banking union’s development and re-assessing all aspects and impacts of Czechia’s entry within three years – after the Czech Republic takes over the EU Presidency in 2022. Since the Czech government is generally not keen on getting closer to the eurozone, the decision was expected.
The study argued that the country’s financial sector has been more stable than that of many other EU member states and that joining the union would limit the competence of the country’s national bank’s (ČNB) – an institution which has shown reluctance to join the banking union for some time.