Bloomberg News

Czechs Return to Recession as GDP Contracts for Second Quarter

March 09, 2012

The Czech economy contracted less than initially estimated in the last three months of 2011, confirming the country returned to a recession for the first time since 2009 as government spending cuts damped demand.

Gross domestic product fell 0.1 percent from the previous quarter, when it showed the same contraction, the Czech Statistics Office said today on its website. The reading compares with a 0.3 percent decline reported in a preliminary estimate on Feb. 15. GDP rose 0.6 percent from the same quarter a year ago.

The government in Prague has cut spending and plans to increase taxes to trim the shortfall to less than the European Union limit of 3 percent of GDP by 2013. The economic outlook has worsened because of the crisis in the euro area, which buys about 70 percent of Czech exports.

“On the demand side, foreign trade was still able to increase its surplus to offset declines in quarterly government expendidure and capital creation,” the statistics office said.

The central bank on Feb. 2 lowered its forecast for this year’s GDP growth to zero from 1.2 percent, following a similar revision by the Finance Ministry, which cut its estimate to 0.2 percent on Jan. 31 from 1 percent and didn’t rule out a recession.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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