The preliminary estimate of GDP for the third quarter was disappointing and the outlook for the next period is also less rosy. Analysts from leading banks reacted to the report of the Czech Statistical Office (CSO) that the economy is recovering more slowly than expected after the pandemic crisis with rather gloomy comments.
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Compared to the same quarter last year, the performance of the local economy improved by 2.8 percent, but this means that the Czech Republic is still one of several European countries whose economies did not exceed the level of the pre-crisis year 2019.
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The main reason for the problem is the fact that the most important sector is failing. “The lack of components has already manifested itself in the manufacturing industry, where a slight decline was recorded,” said Vladimír Kermiet, director of the CZSO National Accounts Department. The balance is therefore saved by trade and services.
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Of the eleven Member States of the European Union whose balance sheets were published by Eurostat in Q3, Lithuania, Latvia, Sweden, Belgium and Austria exceeded pre-crisis levels. In addition to the Czechs, France, Italy, Portugal and Spain remained below the level of 2019, where tourism did not fully revive during the summer. The lack of industrial parts can also be attributed to the slower recovery in Germany.
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The Czech Republic’s difficulties are therefore explained by the effect of the “seventeenth federal state”, which this time suffers more from all-German difficulties than other regions.
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The Czech Republic’s position in the European rankings will probably not improve even after the results for the third quarter of the remaining sixteen Member States are published. Eleven of them, especially in Eastern Europe, have already exceeded pre-crisis levels in the second quarter. Although the other five countries were still losing compared to 2019, with the exception of Malta, they were better off than the Czech Republic.
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At the same time, the GDP balance for the third quarter points out that the Czech Republic is one of the most endangered by stagflation, ie minimal economic growth accompanied by a sharp rise in prices. The domestic recovery is delayed and at the same time goods and services have become almost more expensive in Europe during two pandemic years.
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At the same time, economists generally expect shutdowns in industrial companies to continue and GDP growth to slow further at the end of the year. On the contrary, inflation will continue to accelerate due to rising energy prices.
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