Record growth in second quarter but economists disappointed
The Czech economy expanded by 7.8 percent year-on-year in the second quarter of 2021, according to a preliminary estimate from the Czech Statistics Office published on Friday. Gross domestic product grew by 0.6 percent on the previous quarter.
The 7.8 percent year-on-year increase in GDP for the April to June period is the highest ever recorded in the Czech Republic. The previous record was from the second quarter of 2006, when GDP growth reached 7.5 percent.
The upswing has been attributed to the easing of restrictions aimed at stemming the spread of Covid-19, which hit the Czech economy hard last year, and in particular foreign demand and increased household consumption.
Vladimír Kermiet, director of the Czech Statistics Office’s national accounts department, told the Czech News Agency that the easing of anti-epidemic measures had enabled households to partially realise deferred consumption.
Household expenditures on services have also increased, Mr. Kermiet said.
Despite the record increase, year-on-year economic growth was more modest than analysts had expected. They assumed that the economy would grow by about nine percent in the quarter under review.
Economists based this expectation on the fact that there was a low comparison base from 2020, due to restrictions related to the coronavirus pandemic.
Statisticians do not provide details of economic development in the preliminary estimate. But according to information released in the second quarter, foreign demand and expenditure on gross capital formation made a positive contribution to year-on-year GDP growth.
In addition, household final consumption expenditure grew.
The Czech Statistics Office said that year-on-year growth in gross value added was mostly influenced by developments in industrial sectors.
The quarter-on-quarter comparison was positively affected mainly by trade, transport, accommodation and hospitality, it added.
At the same time, Vladimír Kermiet pointed out that, due to a lack of components in a number of industries, inventories of work in progress had increased, which had an impact on the exports of goods.
In the first quarter of 2021, the Czech economy fell by 2.4 percent year-on-year. Quarter-on-quarter, economic output fell by 0.3 percent.
The coronavirus epidemic began to impact the Czech economy last spring. The first cases of the epidemic were registered in the country on March 1, after which the state began to introduce restrictions on trade, services and movement of people, leading to a year-on-year contraction of the economy in the first quarter of 2020.
The worst drop in GDP was seen in the second quarter last year, when it fell by more than a tenth. Year-on-year decline was also recorded in the following quarters.