Already at the end of April, statisticians came up with a preliminary estimate of how the Czech economy fared in the first 3 months
this year. The main news at the time was that, according to a preliminary estimate, gross domestic product grew in 1 January.
quarter on quarter by 0.5 % and year on year by 0.4 %.
But during May, statisticians recalculated the numbers. And they concluded that quarter-on-quarter and year-on-year growth was weaker than
they counted before. According to today's revised estimate, gross domestic product rose in Q1
quarter-on-quarter by 0.3 % and year-on-year by 0.2 %. In other words - the growth of the Czech economy is not accelerating. On a year-on-year
on the basis of the growth of the Czech economy in the first quarter as well as in the last quarter of 2023
only +0.2 %.
On the demand side, rising household final consumption expenditure kept GDP growth afloat. These
increased by 2.1 % year-on-year. This is not surprising given that retail sales have been trending upwards in the last
we can see the plus sign steadily. Government final consumption expenditure increased by 3.5 %. This is where
he continues to spare no expense. And that's the main problem. As we have said repeatedly on this site, government spending would
should be subtracted from GDP rather than added to it. So the higher the government spending, the lower the growth in real
the potential of the economy. If it were not for this government spending, we would already be - not only in feeling but also in numbers -
in a recession.
The recovery in external demand also helped to improve the reported GDP result. Foreign trade balance
with goods and services was 69 billion higher than a year ago. Moreover, while exports grew by 2.5 % year-on-year thanks to
contribution of cars, imports fell by 1.1 % year-on-year. But the biggest drag on GDP growth is investment. Indeed, gross capital formation had a strong negative impact. Here we see a year-on-year decline of 2.7 %. Furthermore, investment in dwellings and buildings is mainly falling.
Adding it all up, it is clear that households and the government have embarked on more spending as inflation has eased. Households
they are spending more, thanks to the rise in wages on their paychecks. At the same time, the savings saved are dissolving
in recent quarters. Also contributing to the higher spending is the fact that interest rates on savings accounts due to the steps
Czech national banks are not so high anymore. In addition, foreign trade is being helped by higher car sales. Against
However, the fact that investment activity has not yet awakened is a factor in all this. And this is also very accurate
an indicator of whether long-term value is being produced in the economy.
We can also look at the Czech economy through the development of gross value added (GVA). Well, in Q1
did not grow, but fell by 0.7 % year-on-year. This is because the year-on-year decline in industry by 1.5 % and in construction by 4 % prevailed.
Growth in money and insurance of 4.9 % only corrected this decline. So, once again, we find that
if the GDP figures were not distorted by statistical methods and government spending, it would be fully revealed that
we're in a recession.
And unfortunately, the industry continues to report problems. A number of companies continue to see their orders fall and are affected by increased energy prices.
Bizarre ESG requirements are making life difficult for a gasping industry. This time the Czech industry has come out of the worst
not even Germany can pull it off. Germany's economy will have its hands full this year making its full-year result
ended in the plus values. The reason is the same as here: the ESG imposing unproductive requirements, wasting
labour and capital and reducing competitiveness.
Adding it all up, the Czech economy will grow in 2024, but its growth will not be significant. This year we are betting on growth
economy by 1.5 %. And it will be a rather artificial growth, driven mainly by government spending, possibly forced by unnecessary
by investing in ESG, which doesn't deliver value, it just reduces our capacity.
Markéta Šichtařová
English 
Czech