GDP comes in slightly above the CNB forecast in 2020 Q4
The CNB comments on the GDP figures for 2020 Q4
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects declined by 4.7% year on year in 2020 Q4. In quarter-on-quarter terms, economic activity increased by 0.6%. In 2020 as a whole, the Czech economy declined by 5.6%.
The year-on-year decline of the Czech economy in 2020 Q4 was 0.7 percentage point smaller than the CNB’s forecast had expected. This was due mainly to a larger-than-expected positive contribution of net exports to GDP growth, as goods and services exports exceeded the forecast more markedly than imports did. Government consumption also rose somewhat faster than forecasted. By contrast, household consumption, which was adversely affected by the renewed closure of most shops and a large number of services during the autumn, saw a slightly larger decline than forecasted. The decrease in gross capital formation as a whole was in line with the forecast, with a slightly smaller decline in fixed investment being offset by a stronger negative contribution of change in inventories.
The published figures bear out the message of the current forecast that the promising restart of the Czech economy was slowed last autumn by the onset of the second wave of the pandemic and the related epidemiological measures. According to the assumptions of the forecast, these measures will only gradually be lifted in the first half of this year. The fight against the pandemic has mainly affected trade and services. By contrast, export-oriented industry has been hit to only a small extent so far, unlike during the first wave. The forecast assumes that the adverse economic impacts of the pandemic will gradually fade during the year as the epidemic situation improves. Economic growth is expected to resume from Q2 onwards, aided by gradually improving household and corporate sentiment. The economy should grow by more than 2% overall this year according to the CNB’s forecast. It is expected to pick up further next year, fostering a gradual return of overall economic activity to the pre-pandemic level.
Petr Král, Executive Director, Monetary Department
GDP comes in slightly above the CNB forecast in 2020 Q4
The CNB comments on the GDP figures for 2020 Q4
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects declined by 4.7% year on year in 2020 Q4. In quarter-on-quarter terms, economic activity increased by 0.6%. In 2020 as a whole, the Czech economy declined by 5.6%.
The year-on-year decline of the Czech economy in 2020 Q4 was 0.7 percentage point smaller than the CNB’s forecast had expected. This was due mainly to a larger-than-expected positive contribution of net exports to GDP growth, as goods and services exports exceeded the forecast more markedly than imports did. Government consumption also rose somewhat faster than forecasted. By contrast, household consumption, which was adversely affected by the renewed closure of most shops and a large number of services during the autumn, saw a slightly larger decline than forecasted. The decrease in gross capital formation as a whole was in line with the forecast, with a slightly smaller decline in fixed investment being offset by a stronger negative contribution of change in inventories.
The published figures bear out the message of the current forecast that the promising restart of the Czech economy was slowed last autumn by the onset of the second wave of the pandemic and the related epidemiological measures. According to the assumptions of the forecast, these measures will only gradually be lifted in the first half of this year. The fight against the pandemic has mainly affected trade and services. By contrast, export-oriented industry has been hit to only a small extent so far, unlike during the first wave. The forecast assumes that the adverse economic impacts of the pandemic will gradually fade during the year as the epidemic situation improves. Economic growth is expected to resume from Q2 onwards, aided by gradually improving household and corporate sentiment. The economy should grow by more than 2% overall this year according to the CNB’s forecast. It is expected to pick up further next year, fostering a gradual return of overall economic activity to the pre-pandemic level.
Petr Král, Executive Director, Monetary Department