My subscription
My Subscription All Publications

Czech GDP (Q1 2022)

Slowdown in Q1, contraction likely in Q2

  • The 0.7% q/q expansion of Czech GDP in Q1 was slightly stronger than expected, although it still marked a slowdown in growth and, in particular, there were signs of weakness at the end of the quarter. We think that spillovers from the war in Ukraine will weigh heavily on industry and cause the economy to contract in Q2.
  • The expansion was slightly stronger than we (+0.5% q/q) and the consensus (+0.4% q/q) had expected given that spillovers from the war in Ukraine looked to have taken a bigger toll on activity at the end of the quarter. In year-on-year terms, GDP rose by 4.6%. GDP was still 1% below its pre-pandemic level of Q4 2019, meaning that the Czech economic recovery remains among the slowest in Europe. (See Chart 1.)
  • This release does not contain a detailed breakdown, but monthly data showed that the rebound was probably driven by services (which bounced back as the hit to the sector from the Omicron variant eased) as well as stronger construction output. (See Table 1.) The expansion in those sectors seemingly outweighed the hit to industrial production, which weakened due to a large fall in car production.
  • We expect the economy to contract in Q2. Supply shortages as a result of the war in Ukraine, which look to have hit car production hard in March, are likely to continue in the coming months. While a continued recovery in tourism and hospitality will lend some support to the economy, we doubt that this will be sufficient to offset falls in industrial output.
  • As a result we expect GDP to contract by 0.4% q/q in Q2, and stagnate for the remainder of the year. For now, we maintain our forecast for GDP to expand by just 2.0% in 2022.

Chart 1: Czech GDP (SA, CZKbn)

Sources: Refinitiv, Czech Statistics Office, Capital Economics

Table 1: Czech GDP & Monthly Activity Data


Monthly Activity Data (% m/m, calendar and working day adjusted)

% y/y

% q/q


Ind. Prod.

Retail Sales1

Accom. & Food

Q2 21








Q3 21








Q4 21








Q1 22








Sources: Refinitiv, Czech Statistics Office. 1includes motor vehicles

Joseph Marlow, Assistant Economist,

Joseph Marlow Assistant Economist
Continue reading

More from Emerging Europe

Emerging Europe Data Response

Russia Activity Data (May)

The latest Russian data for May suggest that activity, having declined sharply after Western sanctions were imposed in March, has started to stabilise. Some sectors of manufacturing have benefited from a shift towards domestic production. On balance, the fall in Russian GDP this quarter looks like it will be in the order of 10% q/q, not the 15% q/q we had previously expected. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.

29 June 2022

Emerging Europe Chart Book

Tightening cycles still have some way to go

Inflation has continued to beat expectations across Emerging Europe over the past month, reaching rates not seen in decades in most countries. It is now weighing more heavily on consumer confidence, and the surprise inflation releases for May prompted central banks to accelerate tightening cycles in a number of economies, including Czechia (125bp hike) and Hungary (185bp). Such large hikes are unlikely to be repeated but, with inflation not set to peak for at least a few more months, tightening cycles still have some way to go. The exceptions are Russia and Turkey. Falling inflation will give Russia’s central bank scope to cut its policy rate further and President Erdogan’s grip on Turkey’s central bank means that rate hikes to combat inflation of more than 70% y/y remain off the cards.

29 June 2022

Emerging Europe Data Response

Economic Sentiment Indicators (Jun.)

The EC’s Economic Sentiment Indicators for Central and Eastern Europe showed broad-based declines in sentiment across the region and across sectors in June to levels not seen in a year. Economic activity has generally held up well since the war in Ukraine started a few months ago, but the second half of this year is likely to be more challenging and we think economic recoveries will slow sharply.

29 June 2022

More from Joseph Marlow

Emerging Europe Economics Update

Turkey’s current account deficit is a growing risk

Spillovers from the war in Ukraine are likely to cause Turkey’s current account deficit to widen to more than 4% of GDP this year. In the recent past, deficits of this scale have tended to precede sharp falls in Turkey’s currency.

25 April 2022

Emerging Europe Economics Weekly

Energy sanctions ratchet up, Russia close to default?

This week’s announcement that the EU will ban the import of Russian coal from mid-August will not have a major impact on Russian export revenues, but it marks a clear shift in the EU’s aim to target Russia’s energy sector ahead of talks on a possible embargo on Russian oil imports next week. Meanwhile, the possibility of a Russian government default is now looking increasing likely following the US Treasury’s decision to restrict Russia’s central bank from using reserves held at US financial institutions. Some Russian corporates have also reported problems with payment so if the government does default, corporates may be next.

8 April 2022

Emerging Europe Economics Update

CNB slows tightening, but more on the horizon

The Czech National Bank (CNB) slowed the pace of its tightening cycle for the third consecutive month today with a 50bp rate hike to 5.00%, but hawkish communications after the meeting suggest that the CNB is not finished yet. We now expect a 50bp hike at the Bank’s next meeting in May, as well as a further increase of 25bp in June.

31 March 2022
↑ Back to top