Czech Republic GDP

Czech Republic

Czech Republic: Economy expands at fastest pace in over seven years

May 29, 2015

In Q1 2015, the economy expanded a seasonally- and calendar-adjusted 4.2% over the same quarter of the previous year, according to more complete data released by the Czech Statistical Office (CZO) on 29 May. The reading met the flash estimate and represented the fastest expansion since Q4 2007. In addition, the reading marked a notable acceleration compared to Q4’s 1.4% year-on-year expansion. Q1’s significant pickup came on the back of stronger private consumption and investment.

Private consumption rose 3.0% in annual terms in Q1, which was up from the 2.0% increase observed in Q4 and marked the largest expansion since Q4 2008. Conversely, government spending decelerated from a 4.2% rise in the fourth quarter to a weaker 1.5% increase in the first quarter. By contrast, total investment rebounded from a 0.4% contraction in Q4 to a remarkable 11.8% growth in Q1, which represented the largest gain since Q3 2007.

On the external side of the economy, exports of goods and services accelerated from a 7.4% increase in Q4 to a 7.7% rise in Q1. Imports also accelerated, rising from an 8.5% increase in the fourth quarter to 9.1% rise in the first quarter. Consequently, the net contribution from the external sector edged down from minus 0.2 percentage points in Q4 to minus 0.5 percentage points in Q1.

Compared to the previous period, GDP grew a seasonally-adjusted 3.1%, which exceeded the 0.4% expansion recorded in the previous quarter and marked the largest quarterly expansion on record.

The Czech National Bank expects the economy to expand 2.6% in 2015. For 2016, the Bank sees economic growth picking up to 3.0%. FocusEconomics Consensus Forecast panelists expect the economy to expand 2.5% in 2015, which is unchanged over the previous month’s projection. For 2016, the panel sees GDP increasing 2.7%.

Author: Teresa Kersting, Economist

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Czech Republic GDP Chart

Czech Republic GDP Q1 2015 1

Note: Year-on-year changes of seasonally-adjusted GDP in %.
Source: Czech Statistical Office (CSO) and FocusEconomics Consensus Forecast.

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