Czech FinMin downgrades GDP growth outlook for 2012 to 0.2 pct

The change against the previous forecast was influenced by the escalation of problems in the euro zone and worse macroeconomic outlook of the Czech Republic´s main trading partners.

The ministry said it did not even rule out economic recession.

In 2013 the Czech economic performance should grow to 1.6 percent, according to the forecast.

"Regarding high uncertainties over further development in the euro zone, the new prediction is burdened with significant downward risks. We cannot even rule out with certainty that the recession from the turn of 2008 and 2009 will not repeat. Further development of Czech economy will, to a large extent, depend on whether and how fast the current situation in problem countries of the euro zone is solved," Finance Minister Miroslav Kalousek said.

Inflation in 2012 should grow to 3.2 percent in 2012, while in 2013 it should drop to 1.5 percent, according to the ministry.

The current account deficit to GDP ratio should stay at a sustainable level.

The situation on the labour market should reflect the slow growth of economy and increased uncertainty over further development. Employment is expected to fall by 0.3 percent this year, while in 2013 it should stagnate, the ministry said.

The unemployment rate based on results of a workforce poll (VSPS), which differs from the method of registered unemployment used by the Labour and Social Affairs Ministry, is expected to grow from last year´s 6.7 percent to 7 percent this year. In 2013 unemployment should grow slightly as well, the ministry said.

Author: ČTK
www.ctk.cz