Czech GDP recorded growth of 3% in 2018, driven mostly by investment activity (2 percentage points (pp)), household consumption and government expenditure (0.9pp), according to the data by Czech Statistics Office published March 1. It increased by 2.8% year-on-year and by 0.9% in 4Q18 quarter-on-quarter.

“The gross value added (GVA) increased in the Q418 by 1.1% q/q, and by 3.0% y/y. Manufacturing contributed the most to the y/y growth of the GVA (0.7 percentage point (pp)), it was mainly owing to manufacture of motor vehicles and manufacture of electronic and optical products. A group of economic activities of trade, transportation and storage, accommodation and food service activities contributed also in the same amount,” the report stated.

On the demand side, the economy growth in the 4Q18 was driven by both the domestic and external demand. Consumption expenditure of households on goods and services grew by 0.2% q/q and by 2.2% y/y. Investment expenditure were spent mainly on construction and machinery equipment.

“The main reason behind the stronger then initially expected 4Q GDP growth was net exports. With total exports growing by 5% YoY, the total negative contribution of net exports to YoY growth was just 0.2ppt. Both ING and the CNB expected a more significant negative impact, -1.2ppt in the case of the CNB,” said the ING Chief Economist Jakub Seidler.

“Czech economy showed very good performance, despite stagnation of the German economy. This year we expect GDP growth to be at 2.7%,” said Komercni banka's economist Jana Steckerova.