Czech Republic: Economy contracts at sharpest pace in over a decade in Q1 on coronavirus woes
May 15, 2020
The economy shrank 2.2% in year-on-year, seasonally-adjusted terms in the first quarter (Q4 2019: +2.0% year-on-year), according to a preliminary release by the Czech Statistical Office (CSO) on 15 May. The downturn, which was largely due to the coronavirus outbreak and the government restrictions that were imposed in March to contain its spread, was the steepest since Q4 2009. Meanwhile, on a quarter-on-quarter basis, GDP collapsed 3.6% in Q1 (Q4 2019: +0.5% quarter-on-quarter)—the worst result on record and on par with the severe downturns recorded in the Eurozone, reflective of the economy’s close ties with developments there.
Although a detailed breakdown is yet to be released, the decline in activity was driven by depressed foreign demand and capital investment, while public spending cushioned the downturn somewhat. On the supply side, the manufacturing and services sector reeled as the coronavirus prompted the shutdown of factories and a large swath of businesses.
More detailed national accounts data will be released on 2 June.
Author: Javier Colato, Economist