The Czech economy grew by 2.5 percent last year, down again quarter-on-quarter.

The Czech economy grew by 2.5 percent last year. Growth slowed down to 3.5 percent the year before. In the fourth quarter, gross domestic product (GDP) was 0.4 percent higher year-on-year. However, this was a slowdown from 1.5 percent in the third quarter. This was the second quarterly decline in a row, putting the economy into a technical recession. This is based on preliminary estimates by the Czech Statistical Office (CSO).

Last year’s growth of 2.5 percent was supported by spending on gross capital formation and foreign demand. The CSO said that the economy was dragged down by household final consumption expenditure.

“In the last quarter of 2022, the performance of the Czech economy fell by 0.3 percent quarter-on-quarter. The main reason for this was lower household final consumption expenditure,” commented Vladimír Kermiet, director of the National Accounts Department of the CSO, on the quarterly data.

Year-on-year, the GDP grew by 0.4 percent in Q4. The growth was mainly driven by spending on gross capital formation and foreign demand. However, final consumption expenditure was negatively affected.

“On the value-added side, industry, in particular, was up year-on-year, while the decline was in the trade, transportation, accommodation, and hospitality sectors,” the CSO added.

According to Akcenta analyst Miroslav Novak, the quarter-on-quarter decline was mainly due to household demand.

“After all, there is no wonder since high inflation has significantly cut into households’ real incomes. Moreover, retail sales continued to decline at the end of last year, and consumer confidence was also very weak,” he said.