Czech Republic: Economy contracts further in Q3 according to preliminary data
November 14, 2013
In the third quarter, GDP decreased a seasonally and calendar-adjusted 1.6% over the same quarter last year, according to the preliminary data released by the Czech Statistical Office. The reading represents a deterioration compared to the 1.3% contraction recorded in Q2 and marks the seventh consecutive period of decline in output. More complete and detailed data will be released on 4 December.
The decline in GDP was driven by a deterioration in both domestic and external demand. On the domestic side of the economy, gross fixed capital formation deteriorated as a consequence of weaker across-the-board investment. Regarding external demand, exports increased by 1.2% year-on-year, but were offset by a higher 2.7% annual increase in imports, thus driving the external sector's contribution into negative territory.
Sequential data confirms the deterioration; GDP declined a 0.5% over the previous quarter in Q3. The print follows the improvement recorded in Q2, when GDP expanded 0.6% over the previous quarter, which marked the first expansion after six periods of declining output - the longest recession since the country began keeping records in 1996.
The Czech National Bank expects economic activity to decline 1.5% this year and to rebound in 2014, expanding 2.1%. FocusEconomics Consensus Forecast panelists are more optimistic and expect the economy to decline 1.0% this year, which is unchanged over the previous month's projection. For 2014, the panel sees the economy expanding 1.8%, which is up 0.1 percentage points from last month's estimate.
Author: Ricardo Aceves, Senior Economist