131
Czech Republic GDP growth will slow to 0.3% in 2023, before picking up to 2.4% in 2024. In 2023, high energy prices, tight financing conditions and weak sentiment will hold back private investment, and still elevated inflation will constrain private consumption. Private consumption will pick up in 2024, underpinned by growing real wages. Inflation will start falling from currently high levels but will only approach the 2% target towards the end of 2024. The unemployment rate will remain low, close to 3%. Macroeconomic policy needs to maintain a tight stance until inflation expectations are firmly under control, while monitoring risks to financial stability. Fiscal consolidation should be pursued to rebuild fiscal buffers. Measures to counter high energy prices should become increasingly targeted at those who are not sufficiently protected by the general social protection system, while preserving incentives for energy savings. Unleashing labour supply and accelerating the green transition would support sustainable growth. The economy has gone through a mild recession GDP stagnated (0% quarterly growth) in the first quarter of 2023. This followed a shallow recession in the second half of 2022, on the back of high energy prices, tighter financing conditions, and continued high uncertainty. Consumer price inflation has risen to levels not seen in almost 30 years and stood at 12.7% in April 2023. Economic sentiment dropped sharply, dampening household consumption and private investment. Elevated inflation squeezed real household incomes. However, inflation pressures have started abating and core inflation dropped from high levels. Exports rebounded, as supply bottlenecks started easing. Consumer sentiment started to recover. The labour market remains tight and the unemployment rate very low, at 2.7% in the first quarter of 2023.
Czech Republic
Source: Czech Statistical Office; and Czech National Bank. StatLink 2 https://stat.link/o5tulv
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023