Czech Republic: Economy rebounds amid low base effect and easing restrictions in Q2
The economy expanded 7.8% in seasonally-adjusted year-on-year terms in the second quarter, swinging from Q1’s 2.4% decline supported by an acceleration in the vaccination campaign and easing restrictions. However, the reading also benefited from a very low base effect. Meanwhile, output increased 0.6% on a seasonally-adjusted quarter-on-quarter basis in Q2. The expansion contrasted the 0.3% contraction recorded in Q1.
Although a detailed breakdown is yet to be released, household and capital spending, as well as the external sector, made positive contributions to growth. On the supply side, the industrial, trade, transportation, accommodation and food services sectors led the recovery.
More detailed national accounts data for Q2 will be released on 31 August.
Looking at the year as a whole, economic activity looks poised to grow, underpinned by the gradual lifting of restrictions, expansionary monetary and fiscal policies, unleashed pent-up spending and inflows of EU funds. However, global supply shortages, low tourist numbers and the spread of new Covid-19 variants pose downside risks.