Prague - The Czech economy will stagnate in 2012, with the unemployment rate rising a slightly and inflation staying below 3 percent in spite of the VAT increase.
The real GDP growth will contract 0.1 percent in 2012.
That is the summary of the Czech Bank Association's economic prognosis, prepared by analysts of seven Czech banks.
"The expected stagnation is the effect of the developments in the eurozone, where a 0.4 percent drop (in GDP) is expected. However, there is generally a great uncertainty over the course of the economic slowdown in Europe," said Luděk Niedermayer from the association.
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According to the Ministry of Social Affairs data, the average unemployment in 2011 was 8.6 percent. The prognosis for 2012 expects the unemployment to increase to 8.9 percent.
Bankers expect the inflation to stay below three percent, which - together with weak economic growth - will keep the interest rates low.
This will help to maintain the positive growth of bank loans, in spite of the economic stagnation. The growth of loans for firms will be around 1.5 percent, estimates the association. Private loans for citizens are expected to grow 4 percent.
The Czech economy will return to growth in 2013, estimate bankers. The prognosis expects a 2 percent growth for that year.
The economic recovery in the Czech Republic will be driven by the recovery in Europe, whoes GDP growth in 2013 is estimated on 1.1 percent.
However, in spite of the recovery, 2013 will see the unemployment rate further grow. It will start to drop with a delay.
