GDP growth beats expectations

The Czech economy continues to be one of the strongest in the EU

The Czech economy was successful in the second quarter of 2017, according to the Czech Statistical Office (ČSÚ). A preliminary estimate showed that the gross domestic product (GDP), adjusted for price effects and seasonally adjusted, increased in the second quarter of 2017 by 2.3 percent compared to the previous quarter.

Compared to the second quarter of 2016, GDP increased by 4.5 percent. The second quarter of 2017 had four fewer working days than both the previous quarter and Q2 2016. The growth makes the Czech economy one of the strongest in the EU. More detailed statistics will come out on Sept. 1.

Domestic demand contributed to the fast economic growth, the ČSÚ stated. “The growth was supported by increasing consumption of households and investment activity by enterprises. Performance of most of economic industries of the national economy was growing, i.e. not only that of manufacturing, but also the performance of the majority of economic activities of services,” the ČSÚ said.

The Czech economic performance continued to be accompanied by increasing employment. In the second quarter of 2017, employment rose 0.5 percent compared to the previous quarter and 1.3 percent compared to the same period of last year.

The level of growth in the GDP was higher than most analysts expected, according to daily Hospodářské noviny (HN). The consensus among analysts was that the year-on-year growth would be 2.9 percent, and not 4.5 percent. Analysts expected the growth compared the to previous quarter to be 0.7 percent, not 2.3 percent.

Patrik Rožumberský of UniCredit told HN that the quarter-on-quarter growth was the strongest in the modern Czech era and the year-on-year growth was the best since the end of 2015.

Eva Zamrazilová, head economist at the Czech Banking Association (ČBA) said that the strong labor market was driving household consumption.

Many economists polled by HN said they were revising their full-year estimates for economic growth.

Rožumberský said the biggest stumbling block was a potential labor shortage. Nonetheless, the Czech Republic this year should exceed eurozone growth for the fourth time in a row and bring Czech Republic closer to developed countries.

The positive economic news also caused the Czech crown to strengthen against the euro.

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