Czech first-quarter economic growth stronger than initial estimate

By bne IntelliNews June 4, 2014

The Czech economy gained strength posting its fourth straight quarterly rise in Q1 2014 supported by higher demand both abroad and at home, detailed data by the statistics office showed on June 4. Gross domestic product advanced by 0.4% on the quarter in Q1 following a 1.5% growth in the previous three months. According to the flash estimate announced two weeks ago, the GDP stayed unchanged.

On an annual basis, the Czech economic growth strengthened to 2.5% in January to March 2014, the fastest in three years. The statistical office initially estimated the first-quarter annual growth at 2%, following a 1.1% y/y expansion in Q4 2013. The low prior-year base also contributed significantly to the Q1 growth.

Final consumption expenditure increased by 1.4% y/y in Q1 driven by a 1.4% y/y rise in government spending and by a 1.5% hike in household demand. Gross capital formation was by 2.5% higher than a year ago as a drop in inventories was offset by a 5.2% growth in investments mainly in transport and machinery equipment as well as in construction. Foreign trade also contributed significantly to the Q1 growth. The positive balance of trade in goods and services increased by 46.6% from last year, data showed.

On the supply side, activity increased in all sectors except for financial and insurance activities. The key manufacturing sector expanded by 4.6% y/y with production of transport equipment contributing the most to the overall growth. The construction sector posted a 2.6% y/y rise thanks to favourable weather conditions.

IntelliNews comment: The export-driven economy is reviving from a record-long recession that ended in 2013. Recovery is aided by rising demand for Czech products abroad, mainly in the euro zone, the Czech Republic’s main trading partner. Improving domestic demand is also supporting growth in 2014. Rising real wages and improving labour market prospects will help household consumption continue its positive contribution to the GDP after several years of stagnation and contraction. Private investments are to rebound on the back of improving business confidence and rising demand for loans. The upturn in public investment should be supported by increased spending of the new government and a surge in EU-funded investment projects.

According to the latest forecast of the Czech finance ministry, the GDP should grow by 1.7% in 2014, recovering from a 0.9% drop in 2013. The estimate is lower than expectations of both the European Commission and the IMF that see a growth of 2% and 1.9%, respectively.

Related Articles

Poland isolated again as it threatens to block EU declaration

Poland will not sign the Rome Declaration if its demands for moulding the EU’s future are not reflected in the document, Prime Minister Beata Szydlo threatened on March 23. The statement could ... more

EU asks CEE to comment on Russian gas promises

The European Commission has invited comments from Central & Eastern European states on proposals put forward by Russian gas giant Gazprom to meet competition concerns. Visegrad and the Baltic ... more

Poland struggles in bid to oust Tusk

The Polish government spent March 6 canvassing for support for its alternative candidate for the European Council presidency to compatriot Donald Tusk. However, it met little success, even in its own ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss