GDP drop unexpectedly high

A GDP estimate for the first quarter shows a 3.4 percent drop in economic output, the biggest quarterly year-on-year decline in the country’s modern history. Prime Minister Jan Fischer said in response to the news that it would be extremely difficult to keep the 2008 state deficit within the projected 150 billion crown limit, since the state budget had been drafted on the basis of a predicted 2 percent drop in GDP in the first quarter. According to a Finance Ministry forecast the economy is to fall by 2.3 percent this year, but in 2010 it should recover slightly and grow by 0.8 percent. The unemployment rate grew to 7.9 percent in April from 7.7 percent in March and is expected to reach 10 percent by the end of this year.