The economy grew in the first quarter. It is pulled by households

“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,” added Vladimír Kermiet, Director of the National Accounts Department of the CZSO.

The quarter-on-quarter development of gross added value was positively influenced primarily by the group of trade, transport, accommodation and hospitality sectors. On the contrary, industry had an effect, the construction industry stagnated.

According to Peter Dufek, Chief Economist of Creditas Bank, the engine of the economy is currently domestic demand, especially households and their consumption. “After the wave of inflation subsides, the real financial situation of households improves, which allows them to buy more,” he added, adding that consumption will drag the economy throughout the year.

On the other hand, demand from abroad will be a brake throughout the year, mainly due to the weak economic situation in neighboring Germany. “After all, this negative trend can be seen in the performance of the domestic, export-oriented industry – apart from automotive – for a long time,” added Dufek.

UniCredit Bank Chief Economist Pavel Sobíšek stated that the economy is finally experiencing a more noticeable recovery. “Its performance is close to the pre-Covid level of just 0.2 percent, so there is a good chance that it will be surpassed already in the second quarter of this year. This is certainly not and will not be a reason for celebration, but it will be a welcome symbolic point after a series of earlier economic shocks,” he stated in his commentary.