Prague Economic Papers 2002, 11(2):99-120 | DOI: 10.18267/j.pep.190

Czech economy at the beginning of 2002: uncertain prospects

Kamil Janáček, Eva Zamrazilová

Komerční banka, a. s., P. O. Box 839, Politických vězňů 11, CZ - 114 07 Prague 1.

Domestic demand, especially private household consumption and fixed capital investment was the main engine of continuing economic growth. At the same time, strong domestic demand did not provoke regular inflationary pressures. Inflation has stopped to be a threat of macroeconomic stability since the last quarter of 2001. Therefore, the Czech monetary policy could follow the overall world trend in basic rate cuts, the appreciating Czech currency being, however, very reluctant to monetary policy steps.

The slowdown in Western Europe was felt predominantly in the Czech industry, which was very sensitive especially to the decline of demand for Czech industrial exports to Germany. The scope of external imbalance was approximately the same as in previous year - low level of import prices helped to offset the negative impact of weakening foreign demand. The current account deficit was comfortably offset by ongoing inflow of FDI.

Keywords: Czech economy, labour market, monetary policy, external balance, world economic growth

JEL classification: O11, O52

Published: January 1, 2002  Show citation