Czech 2012 public deficit to reach 3.5% of GDP

The Czech Republic's centre-right government said Thursday it was on target to meet its 2012 public finance deficit goal of 3.5 percent of gross domestic product despite a recession. "The government targeted 3.5 percent and this will be achieved," Finance Minister Miroslav Kalousek told reporters. The precise figure will be available after the February release of GDP data for 2012. The economy of this ex-communist country of 10.5 million, heavily dependent on car production and exports to Germany, has been locked in recession for a year. In its latest forecast, the finance ministry said it expected a 1.0-percent economic contraction for 2012, before 0.7-percent growth this year. The 2013 state budget adopted by parliament before Christmas slashes the public deficit -- combining the state budget deficit and deficits posted by health insurers and municipalities -- to 2.9 percent of GDP. This is below the 3.0-percent ceiling fixed by the European Union, which the Czech Republic joined in 2004. The government of Prime Minister Petr Necas plans to further cut the deficit to 2.7 percent of GDP in 2014, and to 2.4 percent in 2015. In 2011, the Czech Republic, which has not set a eurozone entry date yet, saw its economy expand by 1.7 percent. The central bank expects the economy to shrink by 0.9 percent in 2012 and then grow by 0.2 percent in 2013.