The economy is exceeding expectations and is set to continue growing rapidly We expect its current resilience, combined with the impact of strong fiscal stimulus domestically and in Germany, to contribute to GDP growth of 2.7% this year and next. We also think that this growth will be widespread, driven by both domestic and foreign demand.

Inflation should fall below 2% this year but rise above the target again next year The main reason for this year’s decline is significantly lower energy prices. However, strong fiscal expansion, combined with a recovering economy should gradually adversely impact price developments. After averaging 1.6% this year, we expect inflation to rise to 2.3% next year. Core inflation should remain above the CNB’s 2% target in both years.