Real GDP comes in slightly below the CNB forecast in 2023 Q3
The CNB comments on the GDP figures for 2023 Q3
According to the CZSO’s estimate released today, real gross domestic product adjusted for price, seasonal and calendar effects dropped by 0.7% year on year in 2023 Q3. Compared with the previous quarter, economic activity decreased by 0.5%. The new data point to a somewhat stronger contraction of the Czech economy than expected in the CNB’s autumn forecast.
The data released indicate that following slight quarter-on-quarter growth in the first half of this year, the domestic economy contracted again in Q3. Households continued to face a decline in their real income into the summer, while household consumption fell year on year entirely in line with the CNB’s expectations. The slightly deeper drop in real GDP than forecasted was due to the lower contribution of net exports of goods and services, with the export performance of Czech firms being adversely affected by the economic problems of our main trading partner – Germany. The recovery in growth in fixed investment was below the forecast probably for the same reason. By contrast, additions to inventories slowed less markedly than forecasted. General government consumption also grew faster than predicted.
2023 Q3
year-on-year in %
actual figure
MPR Autumn 2023
Gross domestic product
-0.7
-0.6
Household consumption
-2.3
-2.3
General government consumption
3.9
2.4
Gross fixed capital formation
3.3
4.1
Change in inventories (in p. p.)
-2.3
-3.0
Exports of goods and services
-0.5
0.2
Imports of goods and services
-1.8
-2.2
Net exports (in p. p.)
1.0
1.9
constant prices, seasonally adjusted
The CNB’s autumn forecast expects economic activity to decline by 0.4% overall in 2023. The output of the Czech economy is expected to be broadly flat in the last quarter of this year. An increase in fixed investment and consumption expenditure will be counteracted by the negative contribution of change in inventories, related to the unwinding of supply chain problems. Growth in corporate investment in new technology and renewable energy sources is accompanied this year by rising investment by general government, co-financed from EU funds under the previous financial perspective. The economy will recover gradually in the course of next year and real GDP will thus increase by 1.2% in 2024 according to the forecast. Renewed growth in real household income due to a decrease in inflation close to the CNB’s 2% target will play an important role. Together with a decline in households’ saving rate, this will lead to an increase in their real consumption expenditure. A continued decrease in additions to inventories will be partly offset by rising growth in private fixed investment amid solid corporate profitability. The economic recovery will be dampened by fiscal consolidation, which will partly slow the recovery in household consumption and, to a lesser extent, the growth in investment activity. A gradual pick-up in external demand growth will have the opposite effect.
Petr Král, Executive Director, Monetary Department
Real GDP comes in slightly below the CNB forecast in 2023 Q3
The CNB comments on the GDP figures for 2023 Q3
According to the CZSO’s estimate released today, real gross domestic product adjusted for price, seasonal and calendar effects dropped by 0.7% year on year in 2023 Q3. Compared with the previous quarter, economic activity decreased by 0.5%. The new data point to a somewhat stronger contraction of the Czech economy than expected in the CNB’s autumn forecast.
The data released indicate that following slight quarter-on-quarter growth in the first half of this year, the domestic economy contracted again in Q3. Households continued to face a decline in their real income into the summer, while household consumption fell year on year entirely in line with the CNB’s expectations. The slightly deeper drop in real GDP than forecasted was due to the lower contribution of net exports of goods and services, with the export performance of Czech firms being adversely affected by the economic problems of our main trading partner – Germany. The recovery in growth in fixed investment was below the forecast probably for the same reason. By contrast, additions to inventories slowed less markedly than forecasted. General government consumption also grew faster than predicted.
constant prices, seasonally adjusted
The CNB’s autumn forecast expects economic activity to decline by 0.4% overall in 2023. The output of the Czech economy is expected to be broadly flat in the last quarter of this year. An increase in fixed investment and consumption expenditure will be counteracted by the negative contribution of change in inventories, related to the unwinding of supply chain problems. Growth in corporate investment in new technology and renewable energy sources is accompanied this year by rising investment by general government, co-financed from EU funds under the previous financial perspective. The economy will recover gradually in the course of next year and real GDP will thus increase by 1.2% in 2024 according to the forecast. Renewed growth in real household income due to a decrease in inflation close to the CNB’s 2% target will play an important role. Together with a decline in households’ saving rate, this will lead to an increase in their real consumption expenditure. A continued decrease in additions to inventories will be partly offset by rising growth in private fixed investment amid solid corporate profitability. The economic recovery will be dampened by fiscal consolidation, which will partly slow the recovery in household consumption and, to a lesser extent, the growth in investment activity. A gradual pick-up in external demand growth will have the opposite effect.
Petr Král, Executive Director, Monetary Department