Longest Czech recession comes to an end

The Czech Republic’s longest-ever recession has come to an end. Preliminary figures just released by the Czech Statistics Office show that the economy grew by 0.7 percent in the second quarter of 2013. The upturn is the first recorded after six straight quarters saw contraction.

Photo: Klára Stejskalová

Preliminary numbers released by the country’s statistics office suggest that after six-straight quarters things are finally improving for the Czech economy although problems remain – high unemployment and the underlying fact that the modest recovery is largely the result of exports (which increased by 1.4 percent in the April to June period) while domestic spending has not increased. Petr Dufek is a top analyst for ČSOB:

“It is good news and the result was even better than I expected. While the recession was not deep or dramatic, it lasted twice as long as the previous one and came at a time of record unemployment. From the standpoint of sustained economic growth, it’s not perfect: our economy rests on only one pillar, which is exports; it should also be boosted by domestic spending.

“But that remains low and households remain unwilling to spend more due to uncertainty about the future, or because their finances have suffered. Firms, meanwhile, have also delayed new investment.”

At the same time, regarding exports, the Czech Republic can expect further improvement: on Wednesday European statistics released showed major economies like France’s and Germany’s have also improved. Analyst Petr Dufek again:

Petr Dufek, photo: archive of ČSOB

“I think particularly good news is that German consumers are continuing to spend more and more. That is news that will certainly be welcomed by Czech producers and car manufacturers.”

Wednesday’s numbers released by the Czech Statistical Office are preliminary, but observers such as ČSOB analyst Dufek are confident only minor refinements will follow and that the overall outcome will be confirmed.

“There will be certain modifications yet but I don’t think they will be dramatic or will change the overall outcome for the Czech Republic. There will be more information about how consumers behaved or how firms invested but the overall news – that we are out of the recession – will stand.”