GDP comes in slightly below the CNB forecast in 2021 Q2
The CNB comments on the GDP figures for 2021 Q2
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 8.2% year on year in 2021 Q2. In quarter-on-quarter terms, economic activity increased by 1%. The year-on-year growth of the Czech economy in 2021 Q2 was thus slightly lower than the CNB’s forecast had expected.
The published data reflect the recovery in domestic economic activity after the anti-epidemic measures were eased in spring and early summer. However, the highest-ever annual growth in GDP recorded in 2021 Q2 is also due to base effects and the record fall in economic activity during the spring wave of the pandemic in 2020. The recovery in household consumption after the spring easing is quick and fostered by the release of forced savings. The double-digit growth in gross capital formation mainly reflects a still strong contribution of change in inventories. However, as the economy opens, investment activity is also recovering gradually, supported by improving business sentiment. The high year-on-year growth in exports is due significantly to their fall in the same period a year earlier, while export performance was dampened in 2021 Q2 by shortages of parts in industrial production and forced stockpiling of unfinished products. Import growth, which was supported by the recovery in household consumption and investment, thus outpaced export growth. The growth in government consumption reflects continued extraordinary health care expenditure.
2021 Q2
year-on-year in %
MPR Summer 2021
actual figure
Gross domestic product
9.0
8.2
Household consumption
3.9
7.4
Government consumption
3.6
3.0
Gross capital formation
10.8
13.0
Exports of goods and services
35.1
30.6
Imports of goods and services
31.4
31.3
constant prices. seasonally adjusted
The current forecast expects the Czech economy to grow robustly in the second half of 2021. If the anti-epidemic measures were to be partially tightened for a time in the rest of summer or during the autumn due to a rise in new COVID-19 cases, it should no longer have tangible economic effects. This will be due to increasing vaccination coverage and effective new forms of medication, and also to the fact that the economy has learned to cope better with the coronavirus. Growth will be driven mainly by household consumption growth, reflecting both the effect of previously deferred consumption and a gradually improving labour market situation boosting consumer sentiment. The overloading of global supply chains, which is currently hindering the production and export performance of Czech industry, will weaken over the rest of this year. According to the CNB’s current forecast, the Czech economy will grow by more than 3% overall this year. Next year, its growth will increase slightly further and the output of the economy will thus return to the pre-pandemic level. In 2023, GDP will return to its steady-state growth rate.
Dana Hájková, Director, Monetary Policy and Fiscal Analyses Division
GDP comes in slightly below the CNB forecast in 2021 Q2
The CNB comments on the GDP figures for 2021 Q2
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 8.2% year on year in 2021 Q2. In quarter-on-quarter terms, economic activity increased by 1%. The year-on-year growth of the Czech economy in 2021 Q2 was thus slightly lower than the CNB’s forecast had expected.
The published data reflect the recovery in domestic economic activity after the anti-epidemic measures were eased in spring and early summer. However, the highest-ever annual growth in GDP recorded in 2021 Q2 is also due to base effects and the record fall in economic activity during the spring wave of the pandemic in 2020. The recovery in household consumption after the spring easing is quick and fostered by the release of forced savings. The double-digit growth in gross capital formation mainly reflects a still strong contribution of change in inventories. However, as the economy opens, investment activity is also recovering gradually, supported by improving business sentiment. The high year-on-year growth in exports is due significantly to their fall in the same period a year earlier, while export performance was dampened in 2021 Q2 by shortages of parts in industrial production and forced stockpiling of unfinished products. Import growth, which was supported by the recovery in household consumption and investment, thus outpaced export growth. The growth in government consumption reflects continued extraordinary health care expenditure.
constant prices. seasonally adjusted
The current forecast expects the Czech economy to grow robustly in the second half of 2021. If the anti-epidemic measures were to be partially tightened for a time in the rest of summer or during the autumn due to a rise in new COVID-19 cases, it should no longer have tangible economic effects. This will be due to increasing vaccination coverage and effective new forms of medication, and also to the fact that the economy has learned to cope better with the coronavirus. Growth will be driven mainly by household consumption growth, reflecting both the effect of previously deferred consumption and a gradually improving labour market situation boosting consumer sentiment. The overloading of global supply chains, which is currently hindering the production and export performance of Czech industry, will weaken over the rest of this year. According to the CNB’s current forecast, the Czech economy will grow by more than 3% overall this year. Next year, its growth will increase slightly further and the output of the economy will thus return to the pre-pandemic level. In 2023, GDP will return to its steady-state growth rate.
Dana Hájková, Director, Monetary Policy and Fiscal Analyses Division