Czech gross domestic product (GDP) decreased by 0.7% year-on-year and by 0.5% quarter-on-quarter in the 3^rd quarter of 2023.

In the refined GDP estimate, the Czech Statistical Office (CZSO) worsened the previous figures from about a month ago of a 0.6% drop y/y and 0.3% drop q/q in the latest bad news on the Czech economy.  

Last month, CZSO also reported that the Czech industry contracted by 5% y/y in September, and Czechia remains the only EU country not to have recovered its pre-pandemic level of output.

“On the demand side, a change in inventories and external demand were the main factors of the quarter-on-quarter GDP decrease in the Q3 2023”, commented the Director of the National Accounts Department at CZSO, Vladimir Kermiet.

“A positive contribution came especially from final consumption expenditure of general government”, he added.  

Head of the monetary unit at the Czech National Bank (CNB), Petr Kral, stated that the “domestic economy has, after a negligent q/q growth in the first half of this year, found itself in another contraction” and that the 2.3% y/y fall in household consumption pulled the GDP down.

“Export output of the Czech companies was negatively impacted by economic difficulties of our main trade partner – Germany”, Kral was also quoted as saying by the Czech Press Agency.  (CTK)

The contraction is stronger than CNB projections, and J&T commented that the figures “will certainly reinforce the CNB’s contemplations about gradual interest rate cuts already at the end of this year”.

CNB board’s monetary meeting is due to be held on December 21 for the final time in 2023.

J&T also projected an overall GDP drop of 0.4% for 2023, while some analysts surveyed by CTK expect even a 0.5% drop.

The output of the Czech economy is lagging behind the pre-pandemic level yet more and is now by 1.5% lower, head economist at Banka Craditas, Petr Dufek, noted.

Head economist at the Czech Banking Association (CBA), Jakub Seidler, highlighted that both foreign demand and domestic consumption “except for the government consumption” are dampened.