Back on Track? Third Quarter Results Shows Signs of Economic Recovery
Data from the third quarter of 2020 showed some initial signs of economic recovery, mostly due to an easing of measures against the spread of Covid-19 between July and September. However, optimism must be met with caution as most sectors and investment activity are struggling to bounce back to 2019 figures. Photo credit: Freepik.
Czech Rep. Dec. 21 (BD) – According to new data from the Czech Statistical Office, results for the third quarter of this year show signs of economic recovery, as losses are somewhat less than those registered in the second quarter. The months of July, August and September benefited from the easing of measures against the spread of Covid-19 and the resumption of most economic activities.
Domestic consumption and foreign demand increased, contributing to a more optimistic scenario. Compared to the period between April and June, gross domestic product increased by 6.9% in the third quarter of 2020.
However, investment activity remains severely limited with no signs of recovery, as investments fell by 5.0% compared with the second quarter. Moreover, and despite the brighter picture revealed by third quarter statistics, the Czech gross domestic product remains 5.0% lower than for the same period of 2019.
Still, the improvement in the foreign trade balance has had a stimulating effect on the economy, as Marek Rojíček, Chairman of the Czech Statistical Office, explained: “Exporters tried to catch up with the spring losses in the third quarter, which led to a huge increase in exports. Imports also increased, but at a slower pace. The growing export of motor vehicles, but also the decline in the value of oil and natural gas imports, helped improve the balance.”
When it comes to the consumption of medium-sized consumer goods and services, the sectors most affected in the Spring by the effects of the coronavirus pandemic, the trend of a year-on-year decline continued. Any enthusiasm should be accompanied by caution as capital expenditures have not stopped falling.
Recovery was more evident in sectors particularly affected by the paralysis of lockdown, such as manufacturing, trade, transport, accommodation and food services. Nevertheless, most industries are still behind in gross value added when compared with the same period of 2019.
Finally, compared to 2019, the decline in overall employment reached 1.7% in the third quarter. The most affected sectors were professional, scientific, technical and administrative activities; manufacturing and in the group trade, transport, accommodation and hospitality. The unemployment rate is now at 2.9%. The number of economically inactive people also grew, a category that often includes women and people over the age of 60.