Česká národní banka

The CNB comments on the GDP figures for 2018 Q3

30 Nov 2018

Growth in economic activity comes in slightly below CNB forecast in 2018 Q3

According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 2.4% year on year in 2018 Q3. In quarter-on-quarter terms, economic activity increased by 0.6%.

The economic growth recorded in 2018 Q3 was slightly below the CNB forecast in both year-on-year and quarter-on-quarter terms. The slower-than-forecasted GDP growth was due to rather more moderate growth in household consumption. A year-on-year deterioration in net exports, which had not been expected by the forecast, acted in the same direction. This was due to both lower growth in exports of goods and services and higher growth in total imports. It reflected somewhat faster-than-forecasted growth in gross capital formation. Government consumption growth also exceeded the CNB’s expectations.

Overall, growth in economic activity continued to slow in 2018 Q3 in line with the forecast. According to the current CNB forecast, GDP growth will stay slightly above 3% on average this year and in the following two years. It will continue to be driven mainly by growth in household consumption, reflecting buoyant growth in household income and optimistic expectations. Rising demand and increasingly distinct labour shortages are motivating domestic firms to invest, which is helping to improve labour productivity. Public investment expenditure will also grow further as a result of higher drawdown of EU funds. Fiscal policy will also contribute to domestic demand growth this year and the next via a significant rise in current expenditure.

Tomáš Holub, Executive Director, Monetary Department