Real GDP comes in slightly above the CNB forecast in 2023 Q4
The CNB comments on the GDP figures for 2023 Q4
According to the CZSO’s estimate released today, real gross domestic product adjusted for price, seasonal and calendar effects dropped by 0.2% year on year in 2023 Q4. Compared with the previous quarter, economic activity increased by 0.2%. The new data indicate a somewhat earlier onset of the gradual recovery phase of the Czech economy than predicted by the CNB’s winter forecast. Nonetheless, Czech economic performance declined by 0.4% in 2023 as a whole.
A decline in household final consumption expenditure owing to falling real income and a decrease in additions to inventories negatively affected the whole-year figure. By contrast, growth in general government consumption, growth in fixed investment and an increase in net exports had a positive impact.
The Czech economy returned to moderate quarter-on-quarter growth at the end of last year. The year-on-year decline in real GDP at the end of last year was more moderate than the CNB’s forecast. This was due mainly to a higher-than-expected trade balance as a result of renewed growth in exports and, at the same time, a deeper decline in imports. Households continued to face a year-on-year decline in real wages due to elevated inflation. However, household consumption decreased by less than expected by the CNB compared to the same period in 2022. Conversely, growth in general government consumption expenditure fell short of the forecast. The previous decline in additions to inventories culminated in an absolute decrease in inventories at the end of 2023. This was reflected in inventories making a much larger negative contribution to GDP growth than expected by the CNB. The continued buoyant growth in gross fixed capital formation was broadly in line with the CNB’s forecast.
2023 Q4
year-on-year in %
actual figure
MPR Winter 2024
Gross domestic product
-0.2
-0.5
Household consumption
-0.4
-0.8
General government consumption
1.9
3.4
Gross fixed capital formation
4.7
4.3
Change in inventories (in p. p.)
-6.1
-3.3
Exports of goods and services
1.0
-0.8
Imports of goods and services
-4.7
-2.7
Net exports (in p. p.)
4.4
1.4
constant prices, seasonally adjusted
The CNB’s winter forecast expects economic activity to increase by 0.6% in 2024. The observed decline in inflation to close to the CNB’s 2% target is contributing significantly to renewed growth in real household income. Together with a decline in the saving rate, this will lead to an increase in households’ real consumption expenditure. Growth in private fixed investment will also increase amid falling domestic interest rates, while the financial condition of firms will remain solid. By contrast, the contribution of change in inventories will remain negative. Fiscal consolidation will also dampen the economic recovery this year. The recovery in household consumption and, to a lesser extent, the growth in investment activity will slow somewhat. Conversely, external demand will start to pick up gradually as Germany’s current economic problems steadily fade.
Petr Král, Executive Director, Monetary Department
Real GDP comes in slightly above the CNB forecast in 2023 Q4
The CNB comments on the GDP figures for 2023 Q4
According to the CZSO’s estimate released today, real gross domestic product adjusted for price, seasonal and calendar effects dropped by 0.2% year on year in 2023 Q4. Compared with the previous quarter, economic activity increased by 0.2%. The new data indicate a somewhat earlier onset of the gradual recovery phase of the Czech economy than predicted by the CNB’s winter forecast. Nonetheless, Czech economic performance declined by 0.4% in 2023 as a whole.
A decline in household final consumption expenditure owing to falling real income and a decrease in additions to inventories negatively affected the whole-year figure. By contrast, growth in general government consumption, growth in fixed investment and an increase in net exports had a positive impact.
The Czech economy returned to moderate quarter-on-quarter growth at the end of last year. The year-on-year decline in real GDP at the end of last year was more moderate than the CNB’s forecast. This was due mainly to a higher-than-expected trade balance as a result of renewed growth in exports and, at the same time, a deeper decline in imports. Households continued to face a year-on-year decline in real wages due to elevated inflation. However, household consumption decreased by less than expected by the CNB compared to the same period in 2022. Conversely, growth in general government consumption expenditure fell short of the forecast. The previous decline in additions to inventories culminated in an absolute decrease in inventories at the end of 2023. This was reflected in inventories making a much larger negative contribution to GDP growth than expected by the CNB. The continued buoyant growth in gross fixed capital formation was broadly in line with the CNB’s forecast.
constant prices, seasonally adjusted
The CNB’s winter forecast expects economic activity to increase by 0.6% in 2024. The observed decline in inflation to close to the CNB’s 2% target is contributing significantly to renewed growth in real household income. Together with a decline in the saving rate, this will lead to an increase in households’ real consumption expenditure. Growth in private fixed investment will also increase amid falling domestic interest rates, while the financial condition of firms will remain solid. By contrast, the contribution of change in inventories will remain negative. Fiscal consolidation will also dampen the economic recovery this year. The recovery in household consumption and, to a lesser extent, the growth in investment activity will slow somewhat. Conversely, external demand will start to pick up gradually as Germany’s current economic problems steadily fade.
Petr Král, Executive Director, Monetary Department