The Czech parliamentary election that kicks off on Friday looks to be one of the most unpredictable for some time. A victory for the incumbent ANO party would continue the recent trend of loose fiscal policy and support GDP growth, but at the cost of higher inflation and interest rates. Meanwhile, victories for Pirates+STAN or SPOLU may pave the way for a fiscally conservative government that focuses on reining in the budget deficit more quickly. No party appears to be offering solutions to boost the economy’s supply potential, which reinforces our downbeat view on Czechia’s medium-term growth prospects.
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