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Government Approves to Increase 2022 Budget Gap To 330bn CZK

  • Yesterday, Czech Government approved to increase the 2022 budget gap to 330bn CZK, 50bn CZK more than what the lower house passed in March.
  • That represents a 0.8% readjustment (relative to the country's GDP) ,raising the potential 2022 deficit ratio to 5.5% for this year.
  • The increase was mostly due to the Ukraine war impact (energy subsidies for households and companies).
  • This week, we saw that while Vice Governor Zamrazilova could consider ‘all options’ for the next meeting depending on GDP/wage data, Jan Frait said that he will be deciding between rate stability and small hike for the next meeting on August 4.
  • Next economic data to watch will be Q2 GDP print coming out on July 29, expected to fal by 0.4% QoQ (vs. 0.9% in Q1).

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