Czech central bank raises deficit forecast, sees strong wage growth

The Czech National Bank (CNB) has worsened its forecast for this year’s public finance deficit, now expecting it to reach 2.7% of GDP, up from the 2.5% estimate published in February.

According to a table of key economic indicators released by the central bank on Monday, the deficit is projected to widen further to 3.1% next year.

The CNB also said strong wage growth is set to continue this year. Nominal wages are expected to rise by 6.4% after increasing 7.2% last year. In real terms, wages should grow by 4.1%, following a 4.7% increase in 2025.

Wage growth is forecast to slow next year, with nominal wages rising 5.4% and real wages by 2.9%.

Unemployment is expected to increase by 0.4 percentage points this year to 4.8%, before edging down slightly to 4.7% in 2027.