The Czech economy fell by 0.2 percent last year, the CZSO clarified an earlier estimate

Commercial presentation Update: 28/03/2024 13:09
Issued by: 28/03/2024, 09:18

Prague – The Czech economy fell by 0.2 percent last year, and grew by 0.2 percent year-on-year in the last quarter. The Czech Statistical Office (ČSÚ) today refined its previous figure from the beginning of March, which expected a full-year decline in gross domestic product (GDP) by 0.4 percent and in the last quarter by 0.2 percent. According to analysts, the improvement in the estimate was due to higher government spending on consumption and investment at the end of the year. According to them, the statistics confirm the growing consumption of households, which will bring economic recovery.

Last year’s decline of the Czech economy by 0.2 percent followed two years of growth. In 2021, GDP rose by 3.5 percent, the year before by 2.4 percent. Year-on-year growth in the economy in the fourth quarter of last year followed three quarters of decline, the most significant of which was 0.6 percent in the third quarter. Last year, the third quarter was the only one in which GDP decreased quarter-on-quarter. It rose by 0.4 percent quarter-on-quarter in the fourth quarter.

“Refined data for last year’s fourth quarter report a better than originally reported development of government consumption and expenditures on gross fixed capital formation,” said Generali Investments CEE Chief Economist Radomír Jáč. Creditas Bank’s Chief Economist Petr Dufek nevertheless pointed out that even the improvement in the GDP estimate did not return the Czech economy to the level before the covid-19 pandemic, GDP lags behind it by roughly one percent.

According to Patria Finance Chief Economist Jan Bureš, the new data confirmed that the Czech economy is starting to revive, thanks to household consumption. “Today’s revised estimates confirmed what was already known – the consumption of Czech households is picking up again after two years of ‘darkness’. The main reason is the renewed growth of real incomes of Czech households,” he said. According to him, GDP could increase by 1.4 percent this year thanks to revived household consumption.

The sum of monetary and non-monetary income of households fell by 2.5 percent in real terms last year, and real consumption per inhabitant decreased by five percent year-on-year. “The savings rate rose by 2.2 percentage points to 18.6 percent by 2022,” the CZSO said.

Profits belonging to foreign owners of corporations reached 5.6 percent of GDP last year. “In the form of dividends, the foreign owners distributed almost 290 billion CZK and almost 120 billion CZK was reinvested. This development reflects the high profitability of foreign direct investments in the Czech Republic,” said Vladimír Kermiet, director of the National Accounts Department of the CZSO.

Komerční banka analyst Jaromír Gec pointed out that the profit rate of non-financial enterprises was above average at 48.9 percent. “Therefore, it is still true that companies have so far been able to pass on increased costs to consumers, and households have thus been the main bearer of the inflationary burden,” he said. According to Jáč, however, it is evident that the profit rate of companies is no longer accelerating, which means that consumers are no longer willing to accept price increases.

CR GDP 2023 4th quarter AUDIO GRAPHICS CZSO OPENER