The economy is finally coming back to life. Perhaps the Czech Republic will soon cease to be a target of ridicule

Quarter-on-quarter GDP growth was positively influenced by growing domestic demand, especially higher household final consumption expenditures and gross capital formation. Conversely, foreign demand had a negative effect. This follows from the data of the Czech Statistical Office.

“The year-on-year growth was contributed by total expenditure on final consumption and a growing balance of foreign trade. On the contrary, the decline in gross capital formation continued,” commented Vladimír Kermiet, Director of the National Accounts Department of the CZSO, on the new data.

According to the CZSO, the quarter-on-quarter development of gross added value was mainly positively influenced by the group of trade, transport, accommodation and hospitality sectors. The decline occurred in industry, stagnation in construction.

“Czech households were evidently 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,” observes chief economist of Cyrrus Vít Hradil. Unless some unforeseen events throw off consumers again, there’s a good chance the overall economy will continue to pick up in the coming quarters, he said.

“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 subsides, the economy is breathing again into growth,” says Deloitte Chief Economist David Marek. At the same time, however, he points out that the difficulties of the German economy remain its brake, without whose growth the possibilities of the domestic economy are limited.

According to Marko, other potential obstacles to further growth of the Czech economy are mainly geopolitical. These include the ongoing war in Ukraine, tensions in the Middle East and a reduction in the number of cargo ships in the Suez Canal.

However, the Czech economy should continue to rise in the coming months. “In an optimistic scenario, we could finally swing over the pre-pandemic economic level in the second quarter of this year and thus stop being a target of ridicule in Europe,” Hradil assumes. For the whole of this year, the economy could grow between one and one and a half percent.

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