Prague - The Czech economy grew by 2.5 percent year-on-year and by 0.4 percent quarter-on-quarter in the first quarter of this year, thus showing better results than expected in the preliminary estimate, the Czech Statistical Office (CSU) said in a revised estimate today.
The annual rise was the highest in the past three years. According to the CSU's preliminary estimate from mid-May, Czech economy stagnated in quarter-on-quarter terms and rose by 2 percent in year-on-year comparison.
According to the data released today, Czech GDP is only 0.3 percent below the level of Q3 2011, after which it slipped back to the recession.
"In the current quarter it benefited from increasing of both foreign and domestic demand as well as from a very low comparison base, because the Q1 2013 was the weakest for the last four years as for economic performance," the CSU said.
"The fact that the revival is based on broad foundations is positive. The annual growth was boosted by all the main items of demand, that is both private and government consumption, investments and exports," UniCredit Bank analyst Patrik Rozumbersky said.
According to Home Credit analyst Michal Kozub, the CSU data have confirmed that the Czech economy is reviving.
"It (the economy) is clearly out of crisis. This year should therefore be successful in economic terms. There is no fundamental brake that would pull the economy back to crisis," Kozub said.
Analysts expects the domestic economy to grow by 2.5 percent and more this year.
According to Rozumbersky, the year-on-year growth of the Czech economy has surpassed the growth of the Slovak economy, though only slightly.
The Slovak economy rose by 2.4 percent year-on-year and by 0.6 percent quarter-on-quarter in Q1.
According to Czech National Bank (CNB) vice-governor Vladimir Tomsik, household consumption at the end of 2013 was boosted by the weakening of the Czech crown, and today's data show that retail trade did not grow only on Christmas but also afterwards.
The Czech economy is stable and its revival can be seen not only in investments but also in private consumption, Tomsik said.
"The expected revival of the domestic economy has arrived. Today's figures, with insignificant deviations, confirm our current forecast of growth," Tomsik said.
The quarter-on-quarter result was an improvement against the preliminary estimate despite a decrease in revenues from collection of excise duty on tobacco products, caused by retailers' stocking at the end of last year, the CSU said.
The improvement by half a percentage point in the year-on-year comparison resulted from an increase of indirect tax revenue and refinement of the gross value added (VAT) estimate, the CSU said.
Total VAT increased by 2.2 percent year-on-year and by 0.6 percent quarter-on-quarter, especially thanks to manufacturing, particularly manufacture of transport equipment. Growth was also recorded in construction, which benefited from favourable weather, as well as in agriculture, trade, and services.
The biggest contribution to the overall growth of the economy came from foreign trade. Exports and imports of goods were 10.5 percent higher year-on-year and 4.9 percent higher quarter-on-quarter. Surplus of foreign trade in goods and services increased by almost 47 percent year-on-year.
The final consumption expenditure increased in total by 1.4 percent year-on-year. The same rise was recorded for spending in the government sector.
"In households, final consumption expenditure increased by 1.5 percent at lower interest in durable goods and food, while expenditure increased for housing, services, footwear, and clothing," the CSU said.
In comparison with Q4 2013, the final consumption expenditure increased by 1.3 percent.