Czech GDP Fell 5.6 Percent in 2020, Deficit at CZK 33 Billion
According to the Ministry of Finance, the state budget deficit in January stood at CZK 32.9 billion, with GDP having fallen by 5.6% in 2020. Economists expect a gradual return to profit by 2022. Photo Credit: Freepik / Illustrative Photo.
Czech Rep., Feb 4 (BD) – The Ministry of Finance released details of the January state budget deficit on Tuesday, which totalled CZK 32.9 billion, due to adjustments in revenues from the EU and other spending. Additionally, the Czech Statistical Office (ČSÚ) announced a 5.6% fall in gross domestic product (GDP) in 2020, the sharpest since the country was created in January 1993. Both of these negative indicators were the result of the fall in economic activity and foreign demand, along with a slight increase in salaries, government spending, household consumption and capital expenditure. Among the sectors worst hit by the recent economic disruption were trade, transport, accommodation and food services.
Another recent negative trend in the Czech economy is the gradually increasing unemployment. As of February 2nd, there are approximately 521,000 unemployed people in the Czech Republic, and the general unemployment rate for those aged 15-64 increased by 1% to 3.1% in the fourth quarter of 2020, year on year. The highest unemployment rate was in Karlovy Vary Region (6.1%) and the lowest unemployment rate was in Pardubice (1.3%). The average number of hours worked per week also decreased by 3.6 to 31.6 hours.
The macroeconomic forecast from the Ministry of Finance states that in 2021, the economy is expected to recover from 2020’s slowdown, and by 2022 the Czech economy will be again growing. However, due to the uncertainty of the pandemic, the economists are also keeping open the possibility of further decreases in economic activity. The ministry added that: “At national level, sensitive decisions will have to be made between stimulating the economy and increasing debt. Economic growth in 2021 could reach 3.1% on the back of the projected improvement in the epidemic situation following the COVID-19 vaccination roll-out and the forecast recovery abroad.”