IMF sees Czech economic growth slowing to 4%

CzechNews
9. 10. 2008 5:00
While largely immune to the banking crunch, central Europe will lose some of its steam.
Finance Minister Miroslav Kalousek is concerned that slower growth might hurt tax revenue.
Finance Minister Miroslav Kalousek is concerned that slower growth might hurt tax revenue. | Foto: Tomáš Adamec, Aktuálně.cz

Prague - The Czech economic growth will slow down to 4 percent this year from last year's 6.6 percent as the global financial crisis will indirectly hit central and eastern Europe, according to the World Economic Outlook published by the International Monetary Fund.

Slovakia's economy is also expected to lose some steam and see its GDP growth drop to 7.4 percent from a 10.4 percent rate experienced in 2007. The study says that the slowdown will not stop until the second half of 2009.

The only central European country to defy the trend will be Hungary. Its economy is currently growing at only 1.4 percent, the slowest pace in the region, and the IMF forecasts the growth will speed up to 1.9 percent.

The study says that the growth rate of the whole world economy will decelerate to 3.9 percent this year from 5 percent in 2007, affecting also central and eastern Europe. The region's banks remain relatively immune to the global credit crisis, but will be affected through their international owners. The influx of foreign investment will likely wane as a result of the crunch.

The report has not surprised Czech economists. Finance Minister Miroslav Kalousek last week warned the country's GDP growth might slow to 4 percent next year, potentially hurting public finances as the draft 2009 state budget counts on a 4.8 percent growth.

Opposition politicians and some economists say that next year's GDP will grow even less than by 4 percent, while others believe the Czech economy will pick up.

Raiffeissenbank analyst Aleš Michl expects that the upcoming launch of Hyundai's car assembly plant in Nošovice, north Moravia, may add 0.8 percentage points to the country's overall growth.

 

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