Growth of the Czech economy slowed to 3% in 2018, from 4.5% in 2017, driven by domestic demand, according to preliminary estimate published by the Czech Statistics Office (CSO) on February 15. In the 4Q18, domestic GDP grew by 2.9% year-on-year.

“Domestic demand contributed significantly to its growth, especially the gross fixed capital formation and final consumption expenditure of households. The following contributed the most significantly to the growth of the gross value added: economic activities of industry and economic activities of trade, transportation and storage, accommodation and food service activities,” the CSO reported, adding that the gross value added highly increased also in construction and in information and communication.

“In general … the 3% value from today's perspective is a positive surprise as both the CNB and MinFin expected 2018 growth below 3%, mainly due to weaker developments abroad in 2H18,” said the Chief Economist Jakub Seidler.

Strong economic growth in 2018 and in 4Q18 has surpassed analysts' estimates. They expected GDP to grow by 2.8% for 2018 and by 2.4% for 4Q18, the Czech News Agency reporting. According to the Deloitte Chief Economist David Marek, economic growth this year will continue, but its rate will not be high.

“This year, domestic economic growth should slow slightly, with consensus expectations gradually shifting towards 2.5%. The latest CNB forecast stands at 2.9%. The main driver of growth should be, as in the previous year, domestic demand, particularly household consumption and investment by companies and governments. Household consumption will be supported by solid wage growth, but also by a number of social-benefit changes that will increase household income,” Seidler added.