In the first quarter, the Czech economy grew by 4.6 percent year on year, according to preliminary estimates. The Czech Statistical Office (CZSO) said GDP grew by 0.7 percent in 2022.

“The year-on-year GDP growth was positively driven mainly by household final consumption expenditure and gross capital formation. On the contrary, the negative impact of foreign demand persisted, “said Vladimír Kermiet, director of the CZSO’s National Accounts Department.

The year-on-year growth of gross value added was mostly supported by the construction sector and the group trade, transport, accommodation, and hospitality industries. Most of the service sectors also prospered, the CZSO said. More precise data on economic development in the first quarter will be announced on May 31.

The CSO explained the positive quarter-on-quarter development mainly through gross fixed capital formation and growth in the foreign trade balance.

The Czech economy grew by 3.6 percent year on year and 0.8 percent quarter on quarter in the fourth quarter. For the whole of last year, GDP increased by 3.3 percent.

According to Pavel Sobíšek, chief economist at UniCredit Bank, the economy benefited mainly from inertia. “Households were broadly willing to spend despite rising prices, helped by their savings accumulated over the previous two years and the easing of covid restrictions,” he said.

Analyst predicts a technical recession

However, he expects the negative effects of the war in Ukraine to take their toll on the economy in the second quarter. In addition, the impact of last year’s low comparative base will wear off.

“At the same time, the situation does not look like the economic shock will wear off in a single quarter. Therefore, the result is likely to be a technical recession (quarter-on-quarter decline in GDP in at least two consecutive quarters, ed.), which will reduce this year’s full-year GDP growth to around 1.5 percent and negatively affect the outcome 2023, ” Sobíšek added.

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