The CNB comments on the GDP figures for 2022 Q1
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 4.8% year on year in 2022 Q1. In quarter-on-quarter terms, economic activity increased by 0.9%. The year-on-year growth of the Czech economy at the start of this year was one percentage point higher than the CNB’s forecast had expected.
In qualitative terms, the released data bear out the economic narrative outlined by the CNB’s spring forecast for the start of this year. The prediction for household consumption materialised in full. Its high year-on-year growth in 2022 Q1 was largely due to last year’s pandemic shutdowns of the economy, which substantially restricted retail and services during the winter months, thus setting a low comparison base. Gross capital formation was above the forecast, with fixed investment rising much faster than forecasted. In line with expectations, the contribution of additions to inventories remained significant, still reflecting forced stockpiling of unfinished production due to disruptions to international production chains and related logistics. In Q1, government consumption rose slightly more slowly than the CNB had expected in its spring forecast. The dampening effect of net exports was broadly in line with the forecast, with goods and services exports falling slightly less than expected and imports somewhat exceeding the forecast.
|2022 Q1||year-on-year in %|
|MPR Spring 2022||actual figure|
|Gross domestic product||3.8||4.8|
|Gross capital formation||8.0||11.8|
|Exports of goods and services||-1.3||-0.1|
|Imports of goods and services||2.6||3.7|
constant prices, seasonally adjusted
The spring forecast expects Russia’s invasion of Ukraine to slow the growth of the global and Czech economy in 2022. GDP growth will thus slow considerably this year, with economic activity even slightly contracting year on year in the second half of the year. This will be due largely to falling household consumption, as households’ real income has been declining this year, owing to rapid growth in living costs, and their sentiment has simultaneously worsened. Firms will rein in investment because of subdued demand and a deterioration in their financial situation, which is being affected by surging prices of energy and other commodities and materials. The war in Ukraine is adversely affecting growth in external demand and exacerbating the problems in global value chains. Exports will thus remain temporarily subdued and firms will be forced to make increased additions to inventories until mid-2023. However, the contribution of net exports to economic growth will be slightly positive this year due to a noticeable cooling of domestic demand. Growth in economic activity will thus be somewhat below 1% this year. In 2023, GDP growth will pick up to more than 3%.
Petr Král, Executive Director, Monetary Department