The Czech economy fell into recession last year, marking only the sixth annual decline since the country became independent. The main driving force behind this recession was the sustained high inflation, causing people to save and limit their consumption.
“The Czech Republic was heavily impacted by high energy prices, significantly increasing inflation and reducing the population’s purchasing power. Therefore, even in 2023, it could not recover to the pre-pandemic level as the only country in the European Union,” summarized Petr Dufek, the chief economist of Banky Creditas for Novinky.
In the previous year, the price of natural gas rose almost threefold for some, even considering the price cap set by the government. The higher energy costs forced families to cut back on expenses, such as summer vacations.
Meanwhile, lower household consumption contributed to the overall economic performance. Statisticians announced on Tuesday that the gross domestic product of the Czech Republic decreased by 0.4 percent over the entire year compared to the previous year.
However, the situation improved somewhat in the fourth quarter, with the Czech Republic’s gross domestic product growing by 0.2 percent from the third quarter. At the same time, the European Union and the eurozone stagnated. Nonetheless, the Czech Republic and Germany will likely lag behind their neighbors this year. “We estimate that our economy will grow by 0.8 percent this year, and in Germany, it will only be a meager 0.2 percent,” said Komerční banka analyst Martin Gürtler.