Czechia’s gross domestic product (GDP) increased by 0.4% year on year and by 0.5% quarter on quarter in the first quarter of this year.  

The estimate released by the Czech Statistical Office (CZSO) follows a GDP drop of 0.8% in the third quarter of 2023 and a growth of 0.4% in Q4. Following the revision released by CZSO in late March, the Czech economy declined by 0.2% in 2023 overall.

The Q1 2024 figures are also slightly above the estimates but correspond to the market analysts’ expectations of reviving consumer demand following the depressed situation in the households last year.  

CZSO credited “an increasing domestic demand, especially by higher final consumption expenditure of households and gross capital formation” for the q/q growth and pointed to the external demand as having had a negative influence.

“The total final consumption expenditure and an increasing external trade balance contributed to the y/y growth. Conversely, a decrease in gross capital formation continued,” commented Vladimir Kermiet, Director of the National Accounts Department of the CZSO.

CZSO also summed up that positive influence on the q/q development came mainly from trade, transportation, accommodation and food service activities. At the same time, a decrease was registered in industry, and construction stagnated.  

The figures released were followed by news of the q/q growth of Germany’s economy, Czechia’s key partner market, of 0.2% and a y/y drop of 0.2% in Q1 2024. The EU’s economy grew by 0.3% q/q and 0.5% y/y in Q1, according to Eurostat’s estimate.

Detailed results of the national accounts are due on May 31, but local economists surveyed by the Czech Press Agency (CTK) praised the figures as a sign of economy’s return to growth.

Head economist at UniCredit Bank Pavel Sobisek pointed out that a better q/q result came eight quarters ago “prior to the inflation wave and at a time of opening up of economies after the covid lent.” He expects the economy to surpass the pre-pandemic level “already in the Q2.”    

Analysts believe the overall growth of the Czech economy this year is to surpass 1%. “If the European industrial sector refreshes, even a level close to 1.5% seems to be reachable,” Vit Hradil of Cyrrus consultancy was quoted as saying by CTK.