Growth in real wages not sure this yr due to budget cuts -minutes

Average real wage may thus fall this year and rise only moderately in 2013.

The CNB last week worsened its economic development estimate for this year and 2013. The central bank expects stagnation this year and a 1.9 percent GDP growth in 2013.

Czech economy is influenced by developments abroad. The minutes show that the growth outlook in the euro area is substantially lower and the outlook in other regions of the world is also uncertain.

"However, mention was made in the discussion of the good condition of the German economy, which was benefiting from exports to non-European markets," the minutes say.

Domestic firms are optimistic regarding the external demand outlook and the impact of the fall in growth abroad on the domestic economy would not be so significant.

It was also said during the discussion that the demand-pull inflation pressures in the domestic economy would be insignificant this year owing to the absence of GDP growth, fiscal consolidation and also lower household purchasing power because of the VAT increase.

Headline inflation will be just above 3 percent in 2012 owing to the VAT increase and will fall below the inflation target of 2 percent at the start of 2013.

The CNB Board kept interest rates unchanged so the benchmark rate stays at 0.75 percent where it has been since May. All six present Bank Board member voted for the decision.

Author: ČTK
www.ctk.cz