CZECHIA: Finance Ministry Raises '25 Growth Outlook, Cuts '26 Growth Forecast
Aug-21 09:43
The Ministry of Finance revised its 2025 GDP growth outlook a tad higher to +2.1% Y/Y from +2.0% in the previous round of forecasts and trimmed the 2026 growth outlook to +2.0% Y/Y from +2.4%.
- 'In 2025, GDP could grow by 2.1%, mainly thanks to an acceleration in household consumption spending, stimulated by a rise in real incomes and a lower savings rate. Inventory accumulation and government consumption should also support economic growth. In 2026, the Czech economy could grow by 2.0% thanks to renewed growth in investment activity and continued momentum in household consumption. At the same time, the increase in domestic demand will be supported by imports, while exports will be dampened by tariffs from the US, and the foreign trade balance should reduce economic activity more than this year.'
- 'Overall, we consider the risks to the economic growth forecast to be skewed to the downside. The main uncertainties include geopolitical tensions, tariffs and other international trade barriers, possible renewed problems in supply chains, continued strong price growth in services, and volatility in energy and raw material prices. In terms of economic policies, it concerns possible changes in the fiscal policies of EU countries, whether in the context of increasing defence spending or in a form similar to the German stimulus package.'
- The new forecast will be used to support the 2026 state budget which is currently being drafter. Prime Minister Petr Fiala yesterday said that 'based on additional data, the Ministry of Finance's technical proposal will be sent to the government on August 31. At that time, political negotiations on the budget will begin so that, after approval by the government, we can send it to the Chamber of Deputies at the end of September.' Note that the process may be complicated by the October 3-4 parliamentary election.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BONDS: 10-year Gilt/Bund Spread Tests 200bps Following UK Fiscal Data
Jul-22 09:38
The 10-year Gilt/Bund spread has widened 1.5bps today, piercing the 200bp handle for the first time in a month. This morning’s higher-than-expected UK PSNB print is driving the relative underperformance for Gilts.
- Broader core FI yields are facing some upward pressure today, following yesterday’s notable curve bull flattening. Gilt yields are 1.5-3bps higher, while German yields are up 0.5-1.5bps. Both curves have bear steepened on the session.
- Gilt futures are -17 ticks at 91.61, off session lows of 91.46. A bear cycle in Gilt futures remains in play, with initial resistance the 20-day EMA at 91.97. Bund futures are -11 at 130.34, still above the 50-day EMA which was pierced yesterday. A clear break of the EMA would undermine the recent bear theme and highlight a possible reversal.
- 10-year EGB spreads to Bunds are up to 1bp wider, with European equity futures down 0.6% today.
- BOE Governor Bailey is currently speaking to the Treasury Select Committee on the latest Financial Stability Report. Any references to UK inflation or the jobs market will be watched carefully.
- The GBP20.7bln UK PSNB figure for June was GBP6.6bln more than the year prior. The OBR projected a reading of GBP17.1bln, with BBG consensus standing at GBP17.5bln.
- In the Eurozone, the ECB’s Q2 Bank Lending Survey felt supportive of market expectations for one more 25bp cut this cycle - but does not signal a need to rush back into sequential rate cuts following a likely pause at Thursday's decision.
- This morning’s 1.125% Sep-35 Gilt Linker auction was strong (as expected), while German Green Bund supply was digested smoothly.
- Broader focus remains on Thursday’s flash PMIs and the ECB decision.
GERMAN AUCTION RESULTS: Green Bund Results
Jul-22 09:35
| 2.30% Feb-33 Green Bund | 2.50% Feb-35 Green Bund | |
| ISIN | DE000BU3Z005 | DE000BU3Z047 |
| Total sold | E500mln | E1bln |
| Allotted | E422mln | E931mln |
| Previous | E495mln | E2.386bln |
| Avg yield | 2.39% | 2.58% |
| Previous | 2.37% | 2.62% |
| Bid-to-offer | 3.01x | 1.92x |
| Previous | 3.49x | 1.05x |
| Bid-to-cover | 3.57x | 2.07x |
| Previous | 3.53x | 1.32x |
| Avg Price | 99.35 | 99.34 |
| Low Price | 99.35 | 99.34 |
| Pre-auction mid | 99.298 | 99.294 |
| Prev avg price | 99.53 | 98.98 |
| Prev low price | 99.52 | 98.96 |
| Prev mid-price | 99.478 | |
| Previous date | 17-Jun-25 | 08-Apr-25 |
BOE: Bailey Sees UK Experience With Steeper Curve Part of Global Phenomenon
Jul-22 09:25
Bailey speaking on global curves and the UK experience:
- "BANK OF ENGLAND'S BAILEY: WE HAVE SEEN STEEPER YIELD CURVES, THAT IS GLOBAL PHENOMENON" - Reuters
- UK EXPERIENCE IS NOT OUT OF LINE WITH OTHER MARKETS
- CAUSE OF STEEPER YIELD CURVE REFLECTS GREATER UNCERTAINTY ON TRADE POLICY"
He's speaking in front of lawmakers on the BoE's financial stability report - unlikely to get much on monetary policy specifically - but any references to UK inflation or the jobs market will be watched carefully. Livestream here: https://www.parliamentlive.tv/Event/Index/e1eb2a6b-6c37-43d3-a69b-566e1b7a84ab
