CZ: Out of recession with an output of 0.3 percent up

The latest figures on the Czech economy recently released by the statistics office showed the Czech gross domestic product (GDP) grew marginally quarter-on-quarter in the three months to June. According to the preliminary figures, Czech GDP grew 0.3 percent last quarter from the first three months, compared with a 3.4 percent contraction in the first quarter. However, no breakdowns were provided. From a year earlier, output shrank 4.9 percent. Overall, the figures confirmed that the Czech economy emerged from recession last quarter after output expanded, adding to signs that a nascent recovery in Western Europe may be spreading to the east.

 

Prospects for a global economic recovery were supported after recent reports showed the Slovak, German and French economies grew in the three months to June 30. The Czech Republic, whose biggest export is Volkswagen Skoda Auto AS cars, is also showing signs of improvement in its manufacturing sector. Industrial output shrank at the slowest pace in three months in June, a July 31 report showed. According to most analysts, the figures clearly depicted that the worst is over. Experts have predicted taking in account the data from the Eurozone as well as June data on Czech industry and exports, combined with improving business confidence surveys that the Czech GDP is likely to grow on a quarter- to-quarter basis also in the second half. However, the central bank and analysts said a return to robust growth would be slow and is not guaranteed.

 

At their August 6 rate- setting meeting, the Czech National Bank’s policy makers said that the forecast recovery would be very modest and GDP would reach its 2008 level only gradually. The 4.9 percent annual contraction last quarter was a record slump, following an annual decline of 3.4 percent in the first three months. The external forecasts predicting a relatively rapid rebound might be overly optimistic, the central bank minutes said. The board agreed that there were numerous uncertainties surrounding the growth forecast and that a key factor would be the speed and intensity of the external recovery, it added.

Source: Czech Statistical Office