Prague - Seasonally adjusted GDP in the Czech Republic increased by 0.7 percent between the first and the second quarter of this year, according to a first estimate from the Czech Statistical Office (CSU). This means that the Czech Republic's 1.5 year recession, the longest in the history of the country, has ended. The quarter-on-quarter growth beat analysts' estimates.
GDP dropped 1.2 percent year-on-year in the second quarter, but this is primarily the result of a bad economic situation in the previous quarters, said GE Money Bank analyst Petr Gapko. In the first half of 2013, GDP decreased by 1.8 percent year-on-year.
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According to the CSU, the GDP growth in the second quarter was probably driven above all by a 1.4 percent increase in exports between April and June.
Imports grew only by 0.3 percent in the same period, which shows that domestic consumption remains weak. "Consumers are still very cautious in where and how they shop, which translates into the retail result. For example, there has been a big drop in food sale revenues," said Home Credit analyst Michal Kozub.
Fixed capital investments by corporations are also muted, said the CSU.
"Event though the year-on-year figure is still negative, there is an improving trend and the chance of a reversal into economic growth is increasing," said Kozub, adding that foreign demand will be a key factor in the next months. "Of course, unemployment will possibly have a great influence especially on consumption. If it rises to more than 9 percent this winter, households may again cut their spending."
