Czech economy to fall by 1.3 pct this year -- IMF

In the previous forecast from end-November, the IMF said the Czech economy would maintain a growth of up to 2 percent in 2009.

But the Czech Republic has been coping with the impacts of the global economic crisis better than the other countries in Central and Eastern Europe, and its financial sector is in a relatively good shape as well, the IMF said in a report.

However, the crisis started to have a bigger impact on the country at end-2008 owing to its openness.

As it is likely the economy will contract fast in 2009, it will be important to maintain financial stability and limit the impacts of the downturn, the report said.

The Czech Republic can make use of the flexibility enabled by the country's previous healthy policy, the IMF said.

The IMF is not the only institution forecasting a decline in the Czech economy.

The Czech National Bank (CNB) reckons with a fall of up to 0.3 percent in its official forecast. But CNB governor Zdenek Tuma estimated at end-March the Czech economy could shrink by up to 2 percent this year if the recession in Western Europe worsens further.

The Czech Finance Ministry expects GDP to drop by 1.4 percent this year, but admits the fall could be as fast as 2 percent.

Last year, the Czech economy increased by 3.1 percent, the Czech Statistical Office (CSU) said. But in the fourth quarter of 2008, GDP dropped by 0.9 percent compared with the previous three quarters.

In its November forecast, the IMF used information valid as of November 24, 2008 when it completed consultations with the Czech Republic. The updated version was completed in early February this year.

Autor: ČTK
www.ctk.cz