Prague - The Czech economy grew 2.6 percent in the second quarter of 2014 compared to the same period last year, according to a preliminary estimate by the Czech Statistical Office (CSU). The growth was driven above all by a recovery in the manufacturing industry. “The manufacturing of vehicles and rubber and plastic products did particularly well,” said the agency.
Moreover, the construction sector increased for the first time after a long recession, Home Credit analyst Michal Kozub pointed out. The year-on-year growth rate in the second quarter was on the highest level in the past three years, said UniCredit Bank analyst Pavel Sobisek.
“This time last year, the economy was almost at the bottom, sinking because of the second wave of the crisis,” said Kozub.
In a quarter-on-quarter comparison, Czech GDP stagnated in the second quarter, mostly as the result of a sharp drop in tobacco tax revenues after customers stocked up on tobacco products at the end of 2013, said the CSU.
The zero-percent quarter-on-quarter growth was a disappointment to some analysts. “Expectations were of a 0.2 percent growth,” said Citifin analyst Tomas Volf.
“This year's first quarter was an anomaly because the growth was so strong. A warm winter and accumulated demand from the previous year pushed the economy higher than usual. It would be difficult to keep up this pace,” said Kozub.
The Czech economy will grow 2.5 percent this year, estimates the Czech Banking Association (CBA). “These is no reason to overestimate the importance of the sanctions against Russia,” said CBA economist Eva Zamrazilova, adding that Germany's surprising slowdown in the second quarter poses a bigger risk.
According to Germany's Federal Statistical Office, the EU's biggest economy shrank by 0.2 percent from April to June, mostly because of disappointing exports and lower investments especially in the construction sector. This was Germany's first GDP drop in over a year. Germany is the Czech Republic's key business partner.
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