The Czech economy began to recover more significantly in the first quarter, its growth being mainly driven by household consumption. Analysts who react to today’s data on the development of the gross domestic product (GDP) agree on this. According to the first estimate of the Czech Statistical Office, GDP grew by 0.4 percent year-on-year in the first quarter, and by 0.5 percent quarter-on-quarter. According to analysts, the Czech economy could surpass the pre-pandemic level in the second quarter, and they estimate GDP growth of around 1.5 percent for the whole year.
“The long-awaited economic recovery is apparently becoming a reality. “Czech households were obviously waiting for the hot phase of the inflationary crisis to pass, they renewed their shattered confidence in a bright tomorrow and began to spend more,” said Cyrrus Chief Economist Vít Hradil. According to him, if there is no further shock that would affect Czech consumers, there is a good chance that the economy will continue to rise in the coming quarters.
UniCredit Bank Chief Economist Pavel Sobíšek pointed out that the quarter-on-quarter growth was the strongest in the last eight quarters. “So the Czech economy last achieved a better result before the inflationary wave and during the opening of economies after the covid fast. The result means that the Czech economy has finally embarked on the path of a more tangible revival. Its performance came close to the pre-Covid level of only 0.2 percent, so there is a good chance that it will be surpassed already in the second quarter of this year,” he said.
According to Deloitte Chief Economist David Marek, the GDP development shows that the Czech Republic is experiencing an economic spring. “In the previous three years, the Czech Republic experienced three strong negative shocks: the pandemic, the disruption of supply chains and the energy crisis. The beginning of this year is much calmer, and after the inflation has died down, the economy is breathing again into growth. However, the difficulties of our business partner are an unavoidable obstacle, the German economy is struggling and without its growth, the opportunities of the Czech economy are limited,” he pointed out.
Creditas Bank chief economist Petr Dufek also warned that weak growth in Germany will be a drag on the Czech economy this year. According to him, this is already being reflected in the performance of the domestic industry. This year, economic growth will be mainly driven by household consumption. “Consumption will probably not return to the pre-Covid level this year, because given the previous drop, it will take maybe two to three years,” he pointed out, however.
Overall, analysts assess the development of GDP in the first quarter positively, confirming the return to economic growth after last year’s decline of 0.2 percent. “For the whole of this year, the Czech economy is probably headed for a growth of over one percent, while, if the European industrial sector wises up in the meantime, a value close to 1.5 percent seems achievable,” concluded Hradil.
Interview for FLOW with economist Miroslav Singer • e15
