Czech economic performance worsens

Czech GDP growth slowed down in the second quarter of 2002 to 2.5 percent year-on-year, from 2.8 percent in the first quarter. It is the worst result since the third quarter of 2000. In the corresponding period of 2001, Czech GDP grew at a pace of 3.5 percent annually. Experts say the main factor behind the slowdown is weak foreign demand. I spoke to economic analyst Petr Zahradnik about the current development:

"In comparison with most European countries as well as with the United States, the Czech GDP result in the second quarter is not a disappointment. The main factor is the investment activities where it is possible to observe some deceleration in comparison with previous quarters. On the other hand, the household consumption remains relatively very strong, and there is also a visible improvement in net export. I think that the figures both for the second quarter as well as for the first half of 2002 as a whole offer a relatively very good picture of the Czech economy."

If we look forward, do you expect a further slowdown in the third quarter due to the floods for example?

"Yes. I think it is very probable and very realistic. I think that the floods will have a negative impact on GDP growth especially in the short-run, I mean until the end of this year. So, calculating with the impact of the floods, we would be relatively satisfied to see a GDP growth at the end of 2002 at slightly over 2 percent."