9th March 2014

Economic Policy: CZSO announced a recovery of the Czech economy

The Czech Statistical Office (CZSO) announces preliminary data for Czech economic performance in 4Q/2013. The Czech economy faced a sudden and unexpected increase of GDP of 1.9 per cent in the last quarter of 2013 q/q (1.3 per cent y/y). The Czech economy rose in the greatest extent among all EU economies. There are several explanations of such rise. Firstly, there has been a sudden increase in car demands which led to the recovery of car industry. Secondly, consumers decided to buy goods for fear that it could even more rise in price after the Czech National Bank intervention in November, 2013. Therefore, consumers did not hesitate in buying electronics and cars which led to the rise of GDP.
The economists soften the high expectation of politicians by stating that high level of taxation still may cause a burden on consumption of households. They consequently add that there is a positive effect of consumption and increasing public investments.
The Czech National Bank announced that the increase might have also been caused by consumers’ strategy to buy cigarettes before the January rise of excise tax. Further, the CNB expects the GDP growth of 2.2 per cent in 2014, depending on foreign demand for Czech products. The CNB also expects that there would no state fiscal interventions needed. The CNB also advocates the intervention in November 2013 which enabled relative price reduction of Czech products abroad.
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Members of the American Chamber of Commerce in the Czech Republic