Czech GDP growth disappointed in the final quarter of 2016 as it slowed to 1.7% y/y, flash data released by the statistics office on February 14 showed.

The reading was below expectations for economic expansion to recover to 2.4% in the fourth quarter from growth of 1.9% in July-September. Indicators had suggested a rise in momentum in November and December. As it was, quarterly growth sagged to just 0.2%, matching the weakness of the third quarter.

The result leaves full-year economic expansion for 2016 at just 2.3%, the CZSO estimates. That sees growth at its lowest since the Czech Republic escaped a two-year recession in 2014 with a 2.7% expansion. The 4.6% gain in 2015 was largely driven by a low base and a rush to claim EU funds as access under Brussels' 2007-13 budgetary window closed. Slow uptake under the new programme held back expansion last year.

The statistical office offered little comment to accompany the preliminary reading for the fourth quarter, save to point out that annual growth was driven by household consumption and exports. The weak data suggests, therefore, that investment failed to perk up on the back of accelerated absorption of EU funds, as was hoped. Detailed data regarding the structure of growth is due to be released on March 3.

“Economic momentum in the Czech Republic was expected to have accelerated at the end of the year and the pace of year-on-year growth was expected to have increased. The flash estimate failed to fulfil these expectations,” sum up analysts at J&T Bank. “Quite the contrary, the quarter-on-quarter growth stayed moderate and the year-on-year growth slowed down further.”