Decline in economic activity in line with the CNB forecast in 2020 Q1
The CNB comments on the GDP figures for 2020 Q1
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects dropped by 2% year on year in 2020 Q1. In quarter-on-quarter terms, economic activity decreased by 3.3%.
The depth of the decline of the Czech economy in 2020 Q1 was fully in line with the CNB’s forecast. The deviations of the individual expenditure items from the forecast offset each other and were very slight in the context of the unprecedented situation. In line with the forecast, year-on-year growth in household consumption halted as a result of the quarantine measures. The drop in gross capital formation was larger than in the forecast, reflecting both a deeper-than-expected decline in fixed investment and a smaller contribution of change in inventories. By contrast, net exports decreased less than the CNB had forecasted. The decrease in both exports and imports was less pronounced than in the forecast. As expected, government consumption maintained buoyant year-on-year growth, rising somewhat more markedly than predicted.
In line with expectations, the published data confirm the strongly negative impacts of the coronavirus pandemic and the related decline in external demand and government quarantine measures on the domestic economy. As forecasted, the restrictions are gradually being lifted and most sectors of the Czech economy are gradually starting up again during 2020 Q2. However, the negative impacts of the subdued external demand, worse global sentiment and very unfavourable perception of the economic situation among Czech households and firms will persist. This will dampen the return of fixed investment to growth. Exports can also be expected to fall sharply due to the drop in external demand. Following an initial decline, household consumption will be supported by massive stabilising fiscal policy measures and still positive wage growth. In addition to programmes to support the liquidity of households and firms hit by the pandemic, government expenditure is rising this year owing to a previously approved increase in pensions and non-market sector wages and continued investment activity in the public sector. Overall, GDP will fall significantly this year and, despite a gradual resumption of growth, economic activity will not return to the pre-pandemic level before the end of next year.
Petr Král, Executive Director, Monetary Department
Decline in economic activity in line with the CNB forecast in 2020 Q1
The CNB comments on the GDP figures for 2020 Q1
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects dropped by 2% year on year in 2020 Q1. In quarter-on-quarter terms, economic activity decreased by 3.3%.
The depth of the decline of the Czech economy in 2020 Q1 was fully in line with the CNB’s forecast. The deviations of the individual expenditure items from the forecast offset each other and were very slight in the context of the unprecedented situation. In line with the forecast, year-on-year growth in household consumption halted as a result of the quarantine measures. The drop in gross capital formation was larger than in the forecast, reflecting both a deeper-than-expected decline in fixed investment and a smaller contribution of change in inventories. By contrast, net exports decreased less than the CNB had forecasted. The decrease in both exports and imports was less pronounced than in the forecast. As expected, government consumption maintained buoyant year-on-year growth, rising somewhat more markedly than predicted.
In line with expectations, the published data confirm the strongly negative impacts of the coronavirus pandemic and the related decline in external demand and government quarantine measures on the domestic economy. As forecasted, the restrictions are gradually being lifted and most sectors of the Czech economy are gradually starting up again during 2020 Q2. However, the negative impacts of the subdued external demand, worse global sentiment and very unfavourable perception of the economic situation among Czech households and firms will persist. This will dampen the return of fixed investment to growth. Exports can also be expected to fall sharply due to the drop in external demand. Following an initial decline, household consumption will be supported by massive stabilising fiscal policy measures and still positive wage growth. In addition to programmes to support the liquidity of households and firms hit by the pandemic, government expenditure is rising this year owing to a previously approved increase in pensions and non-market sector wages and continued investment activity in the public sector. Overall, GDP will fall significantly this year and, despite a gradual resumption of growth, economic activity will not return to the pre-pandemic level before the end of next year.
Petr Král, Executive Director, Monetary Department