March 3 (Reuters) - The Czech economy fell a little
sharper than expected in the fourth quarter, data showed on
Friday, as the country tipped into technical recession at the
end of 2022 with household consumption falling due to high
inflation.
The Czech economy shrank 0.4% quarter-on-quarter, more than
a flash estimate of 0.3% and following a 0.3% drop in the third
quarter, updated data from the statistics office showed.
It confirmed preliminary data which had estimated a second
quarterly contraction, as the Czech Republic joined Hungary as
two central European economies falling into recession in the
second half of last year.
Poland, too, saw its economy contract in the fourth quarter.
Little relief is seen for central Europe's economies in
early 2023 as the region suffers under decades-high inflation,
well-elevated interest rates, and consumers holding back
spending as their paychecks cannot keep up with price growth.
The data showed household consumption dropped 2.8%
quarter-on-quarter, posting a fifth straight quarterly
contraction.
On a year-on-year basis, the economy gained 0.2%, below an
initial estimate of 0.4% seen in data at the end of January.
For the full-year 2022, growth was at 2.4%. The central bank
forecasts a contraction of 0.3% in 2023.
The slow economy will back central bank arguments to hold
steady on interest rates despite inflation still at over 17%.
The bank has been on hold since last June, with the majority
arguing for steady policy following a year-long hiking cycle
that had raised the base rate by 675 basis points to 7.00%.
Central bankers have not taken a rate hike off the table if
demand pressures build, although markets price in hikes by the
end of the year.
(Reporting by Jason Hovet in Prague; Editing by Varun H K)
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