“The year-on-year development of the economy was mostly affected by a significant decline in domestic demand, both investment and household consumption. The recovery in foreign demand for Czech goods failed to offset the decline in exports of services, “said Vladimír Kermiet, director of the CZSO National Accounts Department, about the current data.
The increase between quarters was mainly due to a low base effect. In the second quarter, the Czech economy recorded the largest decline since the establishment of the Czech Republic in 1993 – GDP fell by 10.9 percent.
The second quarter came from the spring closure of the economy as part of measures against the spread of covid-19.
According to Natland Group chief economist Petr Bartona, the year-on-year decline in the third quarter was unevenly distributed among the individual regions of the Czech Republic.
“More than other quarters, it is affected by tourism revenues. He disappeared in Prague due to the absence of foreigners, “Bartoň reminded. On the contrary, according to him, domestic tourism could help other regions.
Although the economy was able to breathe in the third quarter, the epidemiological situation deteriorated significantly in the autumn and the government made further restrictions.
“Beyond expectations, the favorable growth of the domestic economy in the third quarter is less significant from today’s point of view, as further developments were disrupted by the second wave of the pandemic,” said Jakub Seidler, chief economist at ING Bank.
“As a result of renewed restrictions, the domestic economy will decline again quarter on quarter in the last quarter of this year. The intensity of the decline will depend on the length and scope of economic restrictions, “added the economist.
In its autumn outlook, the International Monetary Fund (IMF) expects Czech GDP to decline by 6.5 percent for the full year. At the same time, it worsened the forecast for next year – according to the IMF, the Czech economy will grow by only 5.1 percent in 2021.
“The autumn lockdown will have a strong negative impact on next year’s GDP. Domestic GDP will probably not return to pre-pandemic levels until 2023, ”believes UniCredit’s chief economist Pavel Sobíšek.