The Czech economy grew by 4.8% year-on-year in the 1Q22, supported mainly by the final consumption expenditure of households and by gross capital formation, according to a revised estimate released by the Czech Statistics Office (CSO).
The annual growth of the Czech GDP was one percentage point higher than the Czech central bank (CNB) had predicted.
"The spring forecast expects Russia’s invasion of Ukraine to slow the growth of the global and Czech economy in 2022. GDP growth will thus slow considerably this year, with economic activity even slightly contracting year on year in the second half of the year," said Petr Kral, Executive Director, of the CNB's Monetary Department.
Quarter-on-quarter, Czech GDP growth reached 0.9% at the end of March.
“The different structure of contributions to the GDP growth in the y/y and q/q comparison is caused by several important factors. The comparison basis of the previous year has still been influenced to a great extent by anti-epidemic measures and a lack of components, especially for industry," said Vladimir Kermiet, Director of the CSO National Accounts Department.
"This year, household expenditure already started to reflect the increasing price level and reduction of their expenditure mainly to durables,” Kermiet added.
According to Petr Sklenar, Chief Economist at J&T Bank, the result is influenced in annual comparison by a low comparative basis, as the economy was impacted by anti-pandemic measures at the beginning of last year.
"Czech economy entered this year in a better condition than expected. At the same time, there is an opening gap, when high inflation mutes consumer demand while investment expenditures continue to drive economic growth. A slump in consumer confidence and improved business sentiment in manufacturing and construction in May indicate that GDP data for 2Q22 will reveal a similar picture," Sklenar commented.
According to him, there is a number of major factors, such as more expensive energies and commodities, supply chain disruptions, higher interest rates, that could result in lower economic growth and the first two factors also point towards higher inflation.