The European Commission (EC) said in its regular spring forecast that the Czech GDP will grow by 3.5 % in 2001 and by 4.0 % in 2002. The growth will be pulled by domestic demand, especially in the private sector. The EC is not anxious about the volume of the public finance deficit gap as such but rather about missing preparations for reforms of mandatory spending. Compared with other candidate countries, the Czech Republic will post the highest public finance deficit, the EC predicts. EU officials seem to be worried neither about the Czech current account deficit, predicted at 4.6 % of GDP in 2001 and 4.2 % in 2002, nor about the trade gap, seen at 8.3 and 7.5 % of GDP, respectively. The Czech Republic can manage to cover these deficits by a robust growth and a strong inflow of foreign direct investment, the EC says. The EC predicts that Czech inflation will be up at 4.3 % this year and at 4.4 % next year. In 2002, inflation could be pushed up by an increase in indirect taxes, which the Czech Republic has to equalize with the EU. Unemployment should fall to 8.5 % in 2001 and to 8.3 % next year. Wages can be expected to rise, but their growth rate should be below that of labor productivity, the EC predicts.
The Czech Republic presented its involvement in international scientific programs in Brussels. A special emphasis was put on participation in the fifth frame program of the EU for research and technological development, which enables the Czech Republic to participate in joint research projects together with the EU countries and to draw money from the program budget. Data show that about 21 % of projects submitted by Czech scientists are accepted which is almost the same percentage as of EU projects. The Czech Republic invests about 0.7 % of its GDP in science and research every year. EU countries dedicate 1.9 % of their GDP for this purpose on average.
The Czech government said that it holds by its energy sell-off schedule despite the fact that the cabinet will wait for the outcome of an appeal by ABN Amro on the results of state tenders for advisers in two energy privatization. ABN Amro filed an appeal with the Antimonopoly Office (ÚOHS) over a battle between two government bodies over who should advise on the sales, worth a combined CZK 150bn. ÚOHS has said it has up to two months to decide. The government had hoped to sell monopoly gas importer Transgas this year and dominant power producer later this year or the next.
The Czech crown was pushed to a low of 34.67 against the euro as EUR strengthened against USD on Wednesday. Late on the day CZK was at 34.62/65 to EUR from 34.47/50 late Tuesday. CZK/USD fell to 38.63/66 from 38.54/59 late Tuesday. Dealers said Reuters that euro/dollar strength, combined with some larger euro-buys were the main reason for the crown's fall and that they expect CZK to stay in a range of 34.50-70 to EUR in the short term.
The longest state 6.95/16 bond fell 10 basis points to 105.30/60, yielding 6.38/35 %. The state 6.75/05 dipped 3bps to 104.35/65, yielding 5.44/36 %. The trading was weak.
| late April 25 | bond yield | late April 24 |
| CZK/EUR | 34.62/65 | - | 34.47/50 |
| CZK/USD | 38.63/66 | - | 38.54/59 |
| State 6.75/05 | 104.35/65 | 5.44/36 | 104.38/68 |
| State 6.95/16 | 105.30/60 | 6.38/35 | 105.40/70 |
(Martin Kupka)