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.
Analysts said an economic rebound could come in the second
half.
"In our view, the economic downturn is likely to persist in
the first half of this year, although more favourable weather
leading to a fall in energy prices is bringing more optimism and
less negative economic scenarios than what was seen in the
market late last year," Jakub Seidler, the chief economist for
the Czech Banking Association, said.
(Reporting by Jason Hovet in Prague, additional reporting by
Robert Muller; Editing by Varun H K)
(Adds quotes)
By Jason Hovet
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, a fifth straight quarterly contraction.
Petr Dufek, chief economist for Banka Creditas, said
household spending was now down about 8% versus the final
quarter of 2019, before the global COVID-19 pandemic hit.
"The fall in real purchasing power caused by high inflation
led to a further significant reduction in purchases of goods and
services, which accelerated at the end of last year," he said.
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