According to a revised estimate, the Czech economy grew by 2.4 percent year-on-year last year. On Friday, the Czech Statistical Office (CSO) announced that the statistics had worsened its estimate from the end of January when it had said the growth of 2.5 percent. In the last quarter of last year, gross domestic product (GDP) grew by 0.2 percent year-on-year, while it fell by 0.4 percent compared to the third quarter.
“The main drivers of the full-year growth were expenditure on gross capital formation and external demand,” the statisticians said.
Gross fixed capital formation was 6.2 percent higher than in 2021. Investment in other buildings and structures and transport equipment grew mainly.
The foreign trade balance ended in negative territory for the first time in 19 years, falling by CZK 187.6 billion year-on-year to minus 8.3 billion.
Household final consumption expenditure fell by 0.9 percent last year, while government final consumption expenditure rose by 0.7 percent.
GDP grew year-on-year in every quarter last year, but growth gradually slowed down. It was 4.7 percent in the first quarter, 3.5 percent in the second, 1.5 percent in the third, and 0.2 percent in the last quarter.
Shallow recession
The quarterly decline of 0.4 percent in the fourth quarter of 2022 compared to the third quarter means that “the Czech economy thus headed into a shallow recession in the second half of last year, which is defined as a quarter-on-quarter decline in GDP for two consecutive quarters,” said Akcenta analyst Miroslav Novák.
He cited a drop in household consumption as the main reason.
“In the fourth quarter, household final consumption expenditure fell by 2.8 percent quarter-on-quarter and 5.5 percent year-on-year. While there was a decline in household consumption throughout last year, the fall in consumption was very intense in the second half of the year. The reasons for this are straightforward: high inflation in general and even higher inflation in sensitive items in the consumer basket, combined with a fall in real wages and consumer confidence,” explained Novák.