Czech Republic: Growth slows to three-year low in Q4 2019
February 14, 2020
The economy grew 1.7% in year-on-year, seasonally- and price-adjusted terms in the final quarter of last year, below the 2.5% upturn logged in the third quarter, according to preliminary release by the Czech Statistical Office (CSO) on 14 February. The pace of expansion undershot market expectations and was the lowest in three years. Meanwhile, on a quarter-on-quarter basis, GDP growth came in at 0.2% in Q4, halving from Q3’s 0.4% climb. For 2019 as a whole, GDP growth eased to 2.4% from 2.8% in 2018.
Although a detailed breakdown is yet to be released, household spending, which has been buoyed by the tight labor market and robust real wage increases, remained the key driver of the expansion. On the supply side, solid activity in the services and construction sectors propped up the upturn. Notably, manufacturing output underwhelmed, reflective of subdued demand conditions in the EU, particularly from the German industrial sector.
Looking ahead, private consumption is set to remain the engine of growth this year, though it will expand at a more moderate pace. Headwinds include uncertainty over the impact on activity from the unexpected rate hike by the Central Bank, diminishing hopes for a solid industrial recovery in the EU and global supply chains taking a hit from the coronavirus outbreak.
More detailed national accounts data will be released on 3 March.
Author: Javier Colato, Economist