30. 5. 2023

GDP comes in just below the CNB forecast in 2023 Q1

The CNB comments on the GDP figures for 2023 Q1

According to the Czech Statistical Office’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects dropped by 0.4% year on year in 2023 Q1. The Czech economy was flat quarter on quarter. The figures on economic activity were slightly lower than expected in the CNB’s spring forecast. 

The released data confirm that the Czech economy is slowly coming out of a shallow recession which started in the second half of last year. The consumption of households, which are facing a deep decline in real income, decreased somewhat more markedly in Q1 than expected by the CNB. Fixed investment also recorded a deeper-than-forecasted decline. A further decrease in the contribution of change in inventories, which was even stronger than forecasted, is signalling that problems in global value chains are abating. Conversely, general government consumption grew faster than forecasted by the CNB. The contribution of net exports to economic growth was higher than forecasted, as year-on-year export growth remains strong at around 10%, while growth in imports slowed due to the downturn in domestic demand. 

2023 Q1 year-on-year in %
MPR Spring 2023 actual figure
Gross domestic product -0.2 -0.4
Household consumption -5.9 -6.3
General government consumption 1.1 3.9
Gross capital formation -2.1 -8.4
Exports of goods and services 7.8 9.5
Imports of goods and services 3.7 3.3

constant prices, seasonally adjusted

According to the CNB’s spring forecast, the Czech economy will expand slightly overall this year. The economic downturn recorded in the second half of 2022 will linger into the first half of this year, mainly due to a continued fall in household consumption expenditure. Czech households are still facing a deep decline in real income. This, together with negative sentiment and a higher saving rate, is reflected in a continued decline in their consumption. Fixed investment will return to growth this year, driven by a still good financial condition of firms and later also recovering external demand. In addition, export activity will be supported by the fading out of problems in supplies of materials and components for production. The downturn in domestic demand will cause import growth to lag well behind export growth this year. The contribution of net exports to economic growth will thus be strongly positive. According to the baseline scenario of the CNB’s spring macroeconomic forecast, economic activity will grow by around 3% in 2024. The scenario does not include the impacts of the government’s fiscal consolidation package introduced in May. 

Petr Král, Executive Director, Monetary Department