The Czech economy probably pulled out of recession in the first quarter with slight growth driven by trade, preliminary data indicated, although high inflation continued to bite.
Gross domestic product in the Czech Republic increased by 0.1% quarter-on-quarter, defying a Reuters poll forecast for a 0.1% drop. GDP shrank by a less-than-expected 0.2% year-on-year, the data showed.
The Czech Republic is the first economy in central Europe to report first-quarter GDP data, but all have felt the strain of high inflation, driven by steep energy price rises last year.
At the end of 2022, the Czech and Hungarian economies slipped into technical recession, defined as two consecutive quarters of declining quarter-on-quarter GDP.
“So it is confirmed, the recession really ended (last quarter),” Komercni Banka economist Jan Vejmelek said in a Twitter post after the data.
The Czech statistics office did not give details of the preliminary data but said external demand buoyed the economy while household consumption decreased. Updated data is due on May 30.
Inflation has surged to double-digit rates across central Europe but looks to have passed a peak. Interest rates remain elevated and central banks are not in a hurry to ease policy until price growth is under control.
Industrial output figures in the region mostly showed declines in January and February, and activity is likely to remain sluggish.
Activity in Poland’s manufacturing sector deteriorated in April, according to S&P Global’s Polish Purchasing Managers’ Index, released on Tuesday.
The index fell to 46.6 from 48.3 in March, staying below the 50.0 line that separates growth from contraction.