2. 12. 2022

GDP comes in slightly above the CNB forecast in 2022 Q3

The CNB comments on the GDP figures for 2022 Q3

According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 1.7% year on year in 2022 Q3. In quarter-on-quarter terms, economic activity decreased by 0.2%. The Czech economy thus grew slightly more year on year in Q3 than expected by the CNB, i.e. its quarterly decline was slightly more moderate than forecasted.

The data released on economic activity largely confirm the main elements of the CNB’s current forecast, although there were partial deviations in the individual expenditure components of GDP. Household consumption, which is being affected by the sharp fall in real income and worse sentiment, decreased more significantly in Q3 than forecasted. General government consumption also recorded an annual decline, whereas the CNB expected it to be flat. However, these deviations were overall slightly outweighed by a higher-than-expected contribution of net exports. Growth in both exports and imports was faster than forecasted. Gross capital formation rose in line with the CNB’s expectations, as the forecasts for both fixed investment and inventories materialised. Gross fixed capital formation started to decline in quarter-on-quarter terms, which reflected the deteriorating situation of companies.

2022 Q3 year-on-year in %
MPR Autumn 2022 actual figure
Gross domestic product 1.5 1.7
Household consumption -4.1 -5.8
General government consumption 0.0 -1.2
Gross capital formation 5.2 5.1
Exports of goods and services 7.4 10.5
Imports of goods and services 5.0 6.2

constant prices. seasonally adjusted

According to the autumn forecast, the Czech economy will switch to a year-on-year decline at the close of this year and then continue to decline for several quarters. This cooling will be due to dramatic growth in living costs, a worsening financial situation of households and firms, weakening external demand and fading global value chain problems. Household consumption will drop owing to worse sentiment and a decrease in real income. However, the latter will be offset by brisk nominal wage growth, fiscal support in the area of energy prices, pension increases and growth in other social benefits. Growth in fixed investment will halt in early 2023 due to a decline in external demand and a worsened financial situation of firms. By contrast, additions to inventories will remain high in the quarters ahead amid only gradually fading problems in global logistics. Besides these problems, exports will be very adversely affected by a sizeable weakening of euro area demand and an expected renewed rise in energy market tensions with the onset of winter 2023/2024.

In whole-year terms, the output of the Czech economy next year will be lower than this year. A positive contribution of net exports and recovering household consumption will be the main factors behind renewed economic growth in 2024.

Petr Král, Executive Director, Monetary Department