Prague - The Czech Finance Ministry revised its 2011 GDP growth estimate to 2.5 percent from the 1.9 percent estimated in April.
In 2012, the Czech economy will grow at the same pace, believes the ministry. In April, it had said the 2012 growth will be slightly weaker - 2.3 percent.
The Finance Ministry explained the upward revision by better-then-expected economic development in the first quarter of 2011.
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"In 2011 and 2012, the economic growth will be driven by the foreign trade," the ministry said in its report.
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In years after that, the GDP growth should further accelerate: to 3.3 percent in 2013 and 3.9 in 2014.
The Finance Ministry appears to be more optimistic in its prognosis than the Czech National Bank. In May, the bank downwardly revised its GDP estimate to 1.5 percent in 2011 and 2.8 in 2012.
The Finance Ministry also revised its estimate of the inflation in 2011 and 2012. In 2011, the inflation is expected to reach 2.3 percent, slightly more than the originally estimated 2.1 percent. In 2012, the inflation will increase to 3.5 percent, mostly because of the effect of the planned unification of the VAT rates on consumer prices, said the ministry.
Also, the ministry expects the unemployment to decrease both this year and in 2012. This year, it is expected to decrease to 6.7 percent, from the 7.3 registered last year. In 2012 it will further decrease to 6.4 percent. The ministry cited improving structural characteristics of the Czech labor market, expected economic growth, and reforms as the main reason for its optimistic estimate.
On the other hand, the ministry downwardly revised its estimate of household consumption, from 0.7 percent to 0.5 percent in 2011. However, in 2012 the indicator is expected to grow by 2 percent.