GDP exceeds estimates in first quarter

Preliminary estimate shows a year-on-year rise of 2.9 percent

The Czech gross domestic product (GDP) was up 2.9 percent year-on-year (y-o-y), according to preliminary estimates by the Czech Statistical Office (ČSÚ). The figures are adjusted for price and seasonal effects. The growth exceeded estimates of the Czech National Bank, which expected a 2.5 percent annual growth rate. More detailed figures will be published in June.

The growth was also up 1.3 percent in Q1 2017 compared to the previous quarter. Analysts surveyed by business daily Hospodářské noviny (HN) said they expected the annual GDP increase to be 2.4 percent and just 0.9 percent quarter-on-quarter.

“The development was contributed to especially by external demand supported by growing consumption of households. According to the preliminary estimate, the performance of most industries of the Czech economy was growing, i.e., not only those in manufacturing, but also the performance of majority of economic activities of services,” the ČSÚ stated.

The estimated growth shows an acceleration compared to the last quarter of 2016, when GDP rose year-on-year by 1.7 percent and by 0.2 percent compared to the previous quarter, according to HN.

The weaker performance at the end of 2016 was due to a number of one-off factors such as stagnant government spending and investing, economist Jiří Polanský of Česká spořitelna told HN.

Komerční banka economist Viktor Zeisel told HN that he expected strong growth in the rest of 2017, boosted in part by EU funded infrastructure projects.

Low unemployment and increasing wages were also cited by experts as factors driving demand and consumption. In Q1 2017, employment was higher by 0.6 percent quarter-on-quarter, and up by 1.5 percent compared to the corresponding quarter of the previous year, according to the ČSÚ.

The news on the GPD also helped the Czech crown to strengthen, reaching Kč 26.420 against the euro.

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