The Czech economy is well positioned to face the current turmoil in the Middle East, with inflation below the central bank’s target, a sound growth structure, and both the fiscal deficit and public debt at manageable levels. The CNB will likely follow the appropriate course at its meeting next Thursday, which is to keep interest rates unchanged at 3.50% until the dust settles.
Czech real industrial production increased by 2.8% year-on-year in January and was down 2.6% from a month ago when adjusted for the number of working days. The reading came in below our forecast, suggesting that industry is not picking up decisively despite its recent stabilisation. That said, the value of new orders grew by 9.8% from the previous year. New orders from abroad gained 8.9% YoY, while new domestic orders added 11.4% annually.