Czechia’s gross domestic product (GDP) experienced a modest increase of 0.4% year on year and 0.5% quarter on quarter in the first quarter of 2024. Despite challenges, this growth indicates a positive shift in consumer demand, contributing to the country's economic recovery.

Encouraging Signs Amidst Challenges

The quarterly growth in Czech GDP was primarily driven by rising domestic demand, particularly higher final consumption expenditure of households and increased gross capital formation. However, external demand exerted a negative influence on overall growth. Positive contributions to year-on-year growth came from total final consumption expenditure and an improving external trade balance, while gross capital formation continued to decline.

Sectoral Trends and Economic Landscape

Trade, transportation, accommodation, and food service activities were among the sectors driving quarterly growth, while industry saw a decrease and construction remained stagnant.

European Economic Context and Future Outlook

The release of these figures coincided with Germany, Czechia’s key trading partner, experiencing a modest 0.2% quarterly growth and a year-on-year decline of 0.2% in Q1 2024. Analysts view these numbers as a positive sign of the Czech economy's recovery, with expectations that it will surpass pre-pandemic levels as early as Q2. Economists anticipate overall growth in the Czech economy to exceed 1% this year, with the potential to reach levels close to 1.5% if the European industrial sector experiences a refresh.

The article was prepared by the CzechTrade Morocco team.