Czech Republic GDP Q2 2021

Czech Republic

Czech Republic: Second estimate reveals stronger-than-expected GDP rebound in Q2

September 1, 2021

A revised estimate revealed that GDP jumped 8.2% year-on-year in Q2 amid an acceleration in the vaccination campaign and easing lockdown restrictions. The result came in above the preliminary estimate of a 7.8% increase and contrasted the 2.5% contraction seen in the first quarter. Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, GDP rebounded 1.0% in Q2 (previously reported: +0.6% s.a. qoq), swinging from the previous quarter's 0.4% decrease.

The second quarter’s annual expansion reflected sizable increases in both domestic and external demand. On the domestic front, consumer spending grew a considerable 7.4% in Q2 compared to Q1's 6.6% contraction, amid recovering consumer sentiment and as the services sector benefited from the lifting of restrictions. Meanwhile, fixed investment rose 1.5% in Q2 following the previous quarter’s 4.2% fall, while public consumption growth came in at 3.0% (Q1: +3.6% yoy).

Exports of goods and services soared 30.6% in Q2 following Q1's 2.7% increase, amid a stronger international trading environment and recovering manufacturing activity. In addition, imports of goods and services jumped 31.3% in Q2 (Q1: +4.1% yoy). The external sector as a whole therefore added 4.8 percentage points to the headline reading in the quarter.

Economic activity looks poised to continue growing in the remainder of the year on the back of recovering demand amid the gradual lifting of restrictions, as well as expansionary monetary and fiscal policies. On top of this, incoming EU funds will provide an additional boost. However, global supply shortages, low tourist numbers and the spread of new Covid-19 variants pose downside risks.

FocusEconomics analysts see GDP expanding 3.6% in 2021, which is down 0.1 percentage points from last month’s forecast, and 4.5% in 2022.

Author: Massimo Bassetti, Senior Economist

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