Neither total GDP, nor its main component, household consumption, have yet returned to the pre-pandemic level. Photo credit: CG / Brno Daily.
Brno, June 28 (BD) – Compared to neighbouring countries, the Czech Republic got through the pandemic and post-pandemic period with visibly worse consequences, in terms of total GDP, and especially its main component, household consumption, according to experts from the SYRI National Institute and CERGE-EI. Both indicators have still not returned to the pre-pandemic level, while the steady decline in consumption in recent years is specific to the Czech Republic and distinguishes it from Poland, Slovakia, Austria and Germany.
The main economic indicator is the gross domestic product. “The whole period has two relatively different parts: the period during the pandemic year 2020, and the period immediately after the pandemic, and neither of them sound very optimistic for the Czech Republic,” said Marek Kapička, who heads the research group focused on Economic Impacts at SYRI.
During 2020, there was a significant drop in GDP of around 10 percent in all monitored countries, but the Czech Republic was the second worst after Austria, which subsequently caught up with the decline through stronger growth. In contrast, the Czech Republic has been stagnant for at least a year and a half and is the only country that has not even for a moment reached the level of GDP before the pandemic.
“We are significantly behind Poland in particular, which is around 10% higher than before the pandemic, but also behind Slovakia and Austria,” said Kapička.
Kapička added that underlying these headline figures are the dynamics of consumption, which in the first quarter of this year was 9% below the pre-pandemic level of 2019.
“At the same time, we have probably not yet reached the bottom. The contrast is particularly dramatic with Slovakia, where consumption has been steadily growing for two years and at the end of 2022 was 7% higher than before the pandemic,” Kapička said.
According to economists, the development of real investments does not look too convincing. Although the Czech Republic overtook the pre-pandemic level relatively quickly, only clearly behind Poland, which was experiencing a significant investment boom, in the Czech case it was only a short-term rise.
“Over the past few quarters, the situation has reversed and is falling again, back to around pre-pandemic levels. With the exception of Poland, which is at a completely different level, we are the only country where there is a renewed decline,” said Kapička.
Compared to the period immediately before the pandemic GDP and investments are approximately at the same level, private consumption is down 9%, and government consumption is up 10%. However, the dynamics in recent quarters appear negative. “The Czech Republic has been on the brink of recession for several quarters and the situation at the moment does not look much more optimistic than in the autumn, rather the opposite,” concluded Kapička.
