Our outlook for the Czech retail sector remains optimistic as the country's economy is expectedto continue firing on all cylinders. An increasingly tight labour market is rapidly pushing up wages, whilepersistently low inflation will boost consumer spending power. In light of this positive economic backdrop,Czech consumption patterns will continue to converge with Western European markets, with anincreasingly larger share of spending directed toward premium and durable items.
We forecast that private consumption will constitute over half of real GDP growth in 2017, as thestrengthening Czech Koruna, combined with weaker demand for manufacturing exports, accelerates theCzech Republic's push towards a more domestic-oriented growth model. Our Country Risk team forecastsrobust 3.6% expansion in private consumption in 2017, up from an estimated 2.9% in 2016. The Czecheconomy as a whole is expected to grow steadily over the remainder of our forecast period, registering 2.7%real GDP growth in 2017 and averaging 2.5% through to 2021.