Czech Republic: Economic growth loses momentum in Q2 but remains solid

Annual GDP growth slowed considerably from 4.2% in Q1 to 2.3% in Q2 in seasonally- and price-adjusted terms, according to preliminary data released by the Czech Statistical Office (CSO) on 14 August. The second-quarter expansion was the weakest in a year and a half, although it largely reflected a high base effect. The main contributors to the Q2 figure were capital expenditure and household spending growth, which was likely buttressed by a robust job market and healthy wage gains. On a quarter-on-quarter basis, GDP growth remained steady at Q1’s 0.5%.

Despite the moderation in annual growth in Q2, the outlook remains largely positive. An exceedingly tight labor market and a planned increase in public spending should underpin growth going forward. More detailed data will be released on 31 August.

Czech Republic GDP Forecast

The Czech Central Bank expects the economy to expand 3.2% in 2018 and 3.4% in 2019. FocusEconomics Consensus Forecast panelists expect the economy to expand 3.4% in 2018, which is down 0.1 percentage points from the previous month’s projection. For 2019, the panel sees GDP increasing 3.0%.