Czech Republic in technical recession as Q4 2022 GDP falls again

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1st April 2023 – (Prague) The gross domestic product (GDP) of the Czech Republic fell by 0.4 percent quarter-on-quarter in the fourth quarter of 2022, according to data published by the Czech Statistical Office (CSU) on Friday. This marks the second consecutive quarter that the country has seen negative growth, thus fitting the technical definition of a recession.

The CSU’s latest report reveals that the Czech Republic’s economy shrank by 0.4 percent in Q4 2022. This contraction in the GDP is in line with the previous quarter, confirming that the country is now in a technical recession.

The report also shows that in year-on-year terms, GDP rose by 0.3 percent, and by 2.5 for 2022. However, the growth rates have been hindered by the decrease in household consumption, driven by a fall in real earnings due to rising costs.

The latest national inflation report published in March for the month of February saw year-on-year inflation come in at 16.7 percent, which is well above the upper band of the Czech National Bank’s tolerance threshold. The increase in prices has led to a reduction in real incomes, thereby impacting the overall economic growth of the country.

The CSU’s quarterly sectoral accounts report, published on Friday, revealed that the real income of households fell by 5.4 percent in 2022. Furthermore, real consumption per capita decreased by 0.8 percent year-on-year. These negative trends are indicative of the economic challenges facing the Czech Republic.

The report suggests that the ongoing COVID-19 pandemic and the resulting disruptions in supply chains and labor markets have contributed to the decline in economic growth. However, the CSU predicts that the country’s economy will recover gradually in the coming months, supported by government policies and the vaccination campaign.

The Czech Republic’s economy has been hit hard by the COVID-19 pandemic, causing a contraction in GDP for two consecutive quarters, leading to a technical recession. The rise in inflation and fall in real income and consumption per capita have added to the country’s economic challenges.

However, the CSU predicts that the Czech Republic’s economy will gradually recover in the coming months, aided by government policies and the vaccination campaign. Nevertheless, the outlook remains uncertain, as the pandemic’s impact on global economies continues to be felt. The government must continue to implement measures to support the country’s economic recovery and ensure a sustained growth trajectory.