According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 3.7% year on year in 2022 Q2. In quarter-on-quarter terms, economic activity increased by 0.5%. The year-on-year growth of the Czech economy in Q2 was thus broadly in line with the CNB’s expectations in its summer forecast.
The released data largely confirm the economic narrative of the CNB’s current forecast, although there were partial deviations in the individual expenditure items. Year-on-year growth in household consumption almost halted. However, consumers proved more resilient to the increasing living costs than forecasted, since their spending did not decrease as had been expected. Continued problems in value chains were forcing firms to make high additions to inventories, the size of which even exceeded the current forecast. Contrary to the CNB’s expectations, the contribution of net exports dampened economic growth, mainly due to higher imports of goods and services. Government consumption continued to grow in Q2, albeit rather more slowly than forecasted. Fixed investment recorded solid growth in line with the forecast.
2022 Q2
year-on-year in %
MPR Summer 2022
actual figure
Gross domestic product
3.6
3.7
Household consumption
-2.0
0.2
Government consumption
3.2
1.8
Gross capital formation
10.3
12.8
Exports of goods and services
0.9
1.8
Imports of goods and services
-0.1
2.7
constant prices, seasonally adjusted
The summer forecast expects GDP growth to slow to 2% this year in whole-year terms. Domestic economic activity will even decline year on year at the year-end and fall quarter on quarter already in the summer. This will be due largely to a drop in household consumption owing to a decline in real household income caused by rapid growth in living costs. In an environment of great uncertainty, firms will rein in investment because of a worse financial situation reflecting a further rise in prices of energy, commodities and materials, and also due to subdued domestic demand. The latter will prevent them from passing their rising costs to prices as strongly as before. As a result of a noticeable slowdown of demand in the euro area and persisting problems in value chains, Czech exports will remain temporarily subdued and firms will be forced to make increased additions to inventories. However, the contribution of net exports to economic growth will be slightly positive this year due to a noticeable cooling of domestic demand. The overheating of the Czech economy will subside quickly this year. GDP growth will slow further to close to 1% next year.
Karel Musil, Director, Macroeconomic Forecasting Division
GDP in line with the CNB forecast in 2022 Q2
The CNB comments on the GDP figures for 2022 Q2
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 3.7% year on year in 2022 Q2. In quarter-on-quarter terms, economic activity increased by 0.5%. The year-on-year growth of the Czech economy in Q2 was thus broadly in line with the CNB’s expectations in its summer forecast.
The released data largely confirm the economic narrative of the CNB’s current forecast, although there were partial deviations in the individual expenditure items. Year-on-year growth in household consumption almost halted. However, consumers proved more resilient to the increasing living costs than forecasted, since their spending did not decrease as had been expected. Continued problems in value chains were forcing firms to make high additions to inventories, the size of which even exceeded the current forecast. Contrary to the CNB’s expectations, the contribution of net exports dampened economic growth, mainly due to higher imports of goods and services. Government consumption continued to grow in Q2, albeit rather more slowly than forecasted. Fixed investment recorded solid growth in line with the forecast.
constant prices, seasonally adjusted
The summer forecast expects GDP growth to slow to 2% this year in whole-year terms. Domestic economic activity will even decline year on year at the year-end and fall quarter on quarter already in the summer. This will be due largely to a drop in household consumption owing to a decline in real household income caused by rapid growth in living costs. In an environment of great uncertainty, firms will rein in investment because of a worse financial situation reflecting a further rise in prices of energy, commodities and materials, and also due to subdued domestic demand. The latter will prevent them from passing their rising costs to prices as strongly as before. As a result of a noticeable slowdown of demand in the euro area and persisting problems in value chains, Czech exports will remain temporarily subdued and firms will be forced to make increased additions to inventories. However, the contribution of net exports to economic growth will be slightly positive this year due to a noticeable cooling of domestic demand. The overheating of the Czech economy will subside quickly this year. GDP growth will slow further to close to 1% next year.
Karel Musil, Director, Macroeconomic Forecasting Division