Czech economic growth likely to have slowed in Q3, but GDP dynamics continue to stay healthy

The economic growth of Czech Republic is likely to have decelerated in the third quarter after an exceptionally strong growth seen in the second quarter. However, the GDP dynamics continue to remain healthy. The second quarter economic growth was driven by huge rise in the external trade surplus that more than countered falling investment.

According to a Societe Generale research report, the GDP growth is likely to have eased to 0.5 percent from 0.9 percent as external trade is not expected to have contributed significantly. However, household consumption is expected to have contributed substantially to the third quarter economic growth.

The sluggishness in the Czech investment activity is already beginning to bottom out. Therefore, it is unlikely to remain a drag on the quarter-on-quarter growth; however, it would still be visible in the year-on-year dynamics. On an annual basis, investment is expected to have declined 5.5 percent in the third quarter, bringing the overall GDP year-on-year growth to 2.2 percent. The forward looking indicators support the view that the Czech economic growth is expected to accelerate marginally in the December quarter, added Societe Generale.