The Czech economy is projected to grow by 1.8% in 2022 and 2% in 2023. The recovery is facing headwinds from further supply disruptions, rising prices and overall uncertainty related to the war in Ukraine. Trade and manufacturing output will slow. A tight labour market will buttress private incomes, but weaker sentiment and rising prices will weigh on domestic demand. Inflation is expected to increase further, before gradually returning towards the tolerance band around the 2% target.
The recovery offers an opportunity to focus on productivity-enhancing investment and upskilling, including better targeting of R&D support and improved business environment.
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2021 Structural Reform Priorities