Czech industrial production fell by 0.4% in 2023, the worst result since the covid-19 pandemic-stricken year of 2020.

December figures released by the Czech Statistical Office (CZSO) were not overly optimistic either, with the output in industry decreasing by 0.7% year on year.

Month on month, an increase of 2.8% was registered, however, and the value of new orders grew by 0.9% y/y. December results “ended up virtually on the same level as in December 2022,” noted the head of Industrial Statistics at CZSO, Veronika Dolezalova.  

She highlighted that the country's automotive industry drove production and orders, while “the decrease was contributed the most by the production of electricity, as for orders, it was due to a deeper slump in the manufacture of basic metals”.

Industrial performance has renewed discussion of the stumbling Czech economy, which has yet to reach its pre-COVID-19 growth level and is also coping with weakened external demand, in large part dependent on the developments in Germany, the country’s largest trading partner.  

Economist and member of the government economic advisory council NERV David Marek told Czech Television (CT) that the economy needs interest rates to be lowered.

“It will start up the construction [sector], production construction material, which is part of industrial production and second […] advantage would be moderate fiscal impulse,” Marek was quoted as saying by CT.

The Czech central bank (CNB) board will hold a monetary meeting this coming Thursday, February 8. Although many analysts expect further lowering of interest rates, down from 6.75%, some suggest CNB may remain cautious.  

In 2023 “decreases in the following industries (economic activities) considerably contributed to the [0.4% drop] result: manufacture of other non-metallic mineral products and manufacture of basic metals,” commented Radek Matejka of CZSO.

In 2022, the industrial output climbed by 2.5%.

“Compared to 2022, the production of electricity decreased. Even a recovery in the manufacture of motor vehicles, trailers and semitrailers and in the manufacture of other transport equipment was not able to turn an overall decrease,” Matejka added.

December construction output decreased by 4.6% y/y and increased by 1.3% m/m, CZSO also reported. Authorities issued 7.5% fewer building permits y/y, and the approximate value of permitted constructions increased by 62.4% y/y. The number of started dwellings decreased by 16.5% y/y and the number of completed dwellings increased by 5% y/y.

“Construction output decreased by 2.6% y/y in 2023, and the decline was sharper in the segment of civil engineering construction,” Matejka commented.