The Czech economy contracted by 11 percent year on year and 8.7 percent quarter on quarter in Q2. The most significant drop in the country’s history.
The result was negatively affected by the decline in foreign demand, according to the Czech Statistical Office. At the end of July, statistics estimated a year-on-year decrease of 10.7 percent and a quarter-on-quarter decline of 8.4 percent. Analysts believe that the economy is probably at its worst this year.
Foreign demand had the largest share in the year-on-year decline in the Czech economy, contributing minus 7.9 percentage points.
Household consumption expenditure contributed to the decline of two percentage points. Households have limited spending mainly on long- and medium-term durability items and spending on services. On the contrary, rising government spending had a slightly positive effect.
Gross fixed capital formation increased by 0.9 percent quarter on quarter but fell by 4.8 percent year-on-year. Only investments in other buildings and structures were higher. Investments in machinery and transport equipment recorded the largest decline.
The foreign trade balance decreased by CZK 56.5 billion years on year to CZK 44.1 billion in the second quarter. This is the lowest value since the second quarter of 2012. Exports of goods and services fell by 23.3 percent year on year. Imports of goods and services fell by 18.2 percent year on year. “The year-on-year development of imports was significantly due to a decline in imports of oil and natural gas, basic metals, machinery and equipment and sub-supplies for the automotive industry,” the CZSO states.