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Gov’t contributed to economic growth only partially, analysts say

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Prague, Dec 21 (CTK) – The centre-left coalition government of Bohuslav Sobotka (Social Democrats, CSSD) has contributed to the good performance of the economy in the past years only to a limited degree since the economy mainly depends on the developments abroad, analysts told CTK yesterday.
In addition, the government assumed power in January 2014, which was at the beginning of economic rise after the previous crisis.
The analysts mainly praised the stability of the incumbent government and the deficit surplus.
This year’s deficit was projected at 70 billion crowns, but the economy will probably post a surplus of several dozen billion crowns.
Assessing his government’s performance in the past three years, Sobotka said yesterday the government brought economic and political stability to the country and that it is raising standards of living and wages and the unemployment rate is low.
“The government of Bohuslav Sobotka inherited the economy at the very beginning of the cyclic revival, boosted by the unprecedented loosening of the currency conditions through the CNB central bank’s foreign currency interventions. The current good state of the Czech economy is due to the above cyclic factors to a great extent,” Pavel Sobisek, UniCredit Bank’s chief economist, said.
He said the government secured political stability and it did not interfere strongly in the market business environment.
“The government will deserve a third positive point, I hope, with the introduction of the sales electronic registration (EET). But it is too soon to assess this,” Sobisek said.
The first stage of EET was launched at the beginning of December and further will follow during the year 2017.
Lukas Kovanda, Roklen chief economist, said “common cyclic factors contributed to economic growth. Another factor was the above-average growth of the Visegrad Group and the economic rise of the euro zone in the past period,” Kovanda said.
The Visegrad Group is alco comprised of Hungary, Poland and Slovakia.
Petr Dufek, CSOB bank analyst, said the Czech economy grew thanks to the results of the processing industry, particularly car production, engineering and other successful branches which assert themselves on foreign markets.
“The success of industry and in fact services as well cut unemployment and at the same time it stimulates the growth of wages in the economy,” Dufek said.
He said the completion of drawing money from the EU from the previous budgetary period also contributed to the good economic performance.
Marek Drimal, Komercni banka (KB) bank economist, said the economic cycle in the Czech Republic depends to a great degree on the developments abroad because of the Czech economy’s export orientation.
He pointed out that the previous recession in the Czech Republic in 2012-13 was also due to the centre-right government’s austerity policy, which was projected into households’ lower consumption.
Drimal said the increase in the economic activity in the past years was also due to an inflow of money from the EU at the end of the past programming period and a better mood among consumers.
“The current government has contributed to the two last factors,” he added.
($1=26.068 crowns)

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