Czech GDP plunges record 3.4 in Q1

15. 5. 2009 10:14
Czech economy is shrinking because of drop-off in investment and decline in exports
Foto: Aktuálně.cz

Prague - Decreasing export pushed Czech gross domestic product (GDP) down record 3.4 percent in the first quarter of 2009, according to the preliminary data of the Czech Statistical Office released Friday.

Economists had forecast a drop by 1.4 to 4 percent.

"The Czech economy has sharply slowed down unexpectedly," said Helena Horská, an economist in Raiffeisenbank in Prague.

"The first quarter results are the worst in the last ten years. The global recession hit the economy in its heart and there has been a sharp plunge in export and investment."

The government subsidies that supported people to trade their old cars for new ones in neighboring countries have slowed down the sharp decline of Czech economy.

"Government and household consumption have slightly helped the Czech economy but if there is no boost for the world economy, the Czech economy may drop in the second quarter even more," Horská added. "If the world economy begins a recovery, the Czech economy should start to rise as well."

The Czech National Bank expects the Czech economy will shrink by 2.4 percent. The Finance Ministry forecasts the economy will contract by 2.3, not excluding a further decline this year.
The International Monetary Fund predicts a 3.5 percent drop and the European Commission 2.7 percent.

Year-on-year, the German economy shrank by 6.7 percent.


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