Matt Atlas

Czech Economy Contracts 5% In Third Quarter

The Czech economy contracted by five percent year on year in Q3 last year. However, the quarter-on-quarter gross domestic product (GDP) rose by 6.9 percent. The results thus remained unchanged from the previous estimate from the beginning of December. According to data from the Czech Statistical Office.

According to revised data, the gross domestic product fell by 10.8 percent year on year in the second quarter, the worst result since establishing the independent Czech Republic. At that time, GDP fell by 8.5 percent quarter on quarter.

Thanks to a low base effect, real household per capita consumption increased by 5.1 percent quarter on quarter in the third quarter last year. It then fell by 2.7 percent year on year. The total per capita real monetary and non-monetary income of households increased by 2.8 percent compared to the previous quarter and by two percent year-on-year.

“The faster growth of household expenditures than their incomes compared to the previous quarter resulted in a lower savings rate of 17.2 percent,” the CZSO said. The household investment rate decreased by 0.4 percentage points to 8.4 percent compared to the previous quarter. Year-on-year, the rate of household investment fell by 1.1 percentage points.

The average monthly income from employment reached CZK 36,089 in the 3rd quarter, compared to the previous quarter, it increased by 9.9 percent in real terms and by 0.1 percent year-on-year. The significant quarter-on-quarter growth in employment was reflected in the cessation of production and the closure of some establishments due to the coronavirus pandemic in the second quarter. “According to the ESA 2010 methodology, funds paid to employees under the Antivirus program do not represent wages,” the CZSO warned.

For non-financial corporations, the profit rate in Q3 was 45.2 percent, which is 1.5 percentage points more than in the previous quarter and 0.5 percentage points more than a year ago. “The profit rate was mainly affected by the waiver of employers’ social contributions to small businesses and subsidies,” the statistics said.

Total labor costs of non-financial corporations fell by 2.6 percent year on year. The investment rate fell by 2.1 percentage points from the previous quarter to 26.7 percent. It fell by 2.7 percentage points year-on-year.