The Czech Republic has the fastest growing economy in Europe, according to revised growth estimates from the Czech Statistical office released on Friday. The revised figures have confirmed the 4.4 percent growth in the second quarter of the year compared with the same period last year.
The country’s Gross Domestic Product grew by 1.0 percent compared with the previous quarter, an improvement on the preliminary estimate, which predicted growth of 0.9 percent. It is the biggest year-on-year rise in the Czech economy since the last quarter of 2007, when
Gross Domestic Product increased by 5.3 percent. Analysts say the Czech Republic now enjoys the most significant growth in the whole of Europe. Talk of a Czech Tiger has even been prompted although growth rates for the following two years are expected to fall back to between two and three percent.
According to David Marek, chief economist of Deloitte, the accelerated growth in the second quarter has pushed the country up to 85.7 percent of the EU average in terms of GDP per capita. In the EU ranking, Czech Republic is doing better than Malta and Cyprus, he pointed out.
Analysts estimate this year’s growth at more than 4.0 percent. Mr Marek predicts a 4.3 percent expansion, while Komerční banka analyst Viktor Zeisel expects that the Czech economy could grow by 4.5 percent. According to Ziesel, next year will see a slowdown to 2.7 percent due to a significant drop in revenues from structural funds and following cuts in investment.
According to the Czech Statistical Office, the latest growth was evenly distributed throughout all economic sections of the country’s economy. Manufacturing increased by 0.7 percent year-on-year and construction was 3.1 percent higher.
Services have also recorded a significant growth. Trade, transport and accommodation increased by 2.8 percent, information and communication activities by 24.4 percent and professional, scientific, technical and administrative activities by 5.9 percent on an annual basis.
Gross Domestic Product has also been driven by household consumption, which contributed around a third of the rise with investment activities making up the remaining two thirds. Some economists are still worried though that the relatively high Czech growth is slow to translate into higher wages and increased inflation. The national bank’s 2.0 percent inflation target is still looking like a distant goal with the likelihood of lower prices for Chinese goods keeping global price rises at a subdued level.
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