The economy has entered a “mild recession”, the Czech Finance Ministry admitted in its macroeconomic forecast for November, which also predicts stagnation and a high 9.5% inflation rate for 2023.
“The current mild recession is not in itself a tragedy; Germany, Italy and other major European economies are going through or will go through a similar scenario,” Finance Minister Zbyněk Stanjura (ODS, ECR) said on Wednesday.
“Although it is not popular to say it out loud, the way out is definitely not artificial pumping of money into the economy, which on the contrary has significantly boosted the current inflation during the covid pandemic,” Stanjura added, referring to the former populist government of Andrej Babiš (ANO, Renew) which ruled the country during the pandemic.
Though inflation is lowering the living standards of citizens, the government’s energy-saving government is expected to force a drop in the annual inflation rate in the fourth quarter of this year, the Finance Ministry led by the conservative Civic Democrats added.
The finance minister noted that high energy prices caused by Russia’s war in Ukraine is the main cause of inflation.
Before the Russian invasion, Czechia depended on Russia for 99% of its energy imports.
Since the start of the war, Czechia has urgently been on a quest to find new energy sources. Taming inflation will thus depend on the success of the country’s actions to secure alternative supplies and reduce its energy consumption.
