The Czech economy expanded by 0.6 percent on a quarterly basis in the third quarter, lifted by growing investments and household and government spending as weaker foreign demand dragged. On an annual basis, gross domestic product grew by 2.4 percent, according to revised statistics office data released on Friday. This was above their preliminary figures which had shown a 0.4 percent quarterly rise and 2.3 percent year-on-year growth.
The Czech economy has been running at full steam but has shown signs of slowing as it combats a labour shortage and growing wage demands for companies. A slowdown in Germany, the country's top trade partner, has hit demand for Czech exports. "Czech growth lags behind the rest of the central European region significantly. It is affected much more by the slowdown in Germany, which has also very likely influenced the exports," said Komercni Banka economist Viktor Zeisel.
"The domestic economy, like the European one, should accelerate in the last quarter this year as foreign demand should strengthen again after the one-off drags subside." Neighbours like Slovakia, Poland and Hungary posted flash estimates of 4.6-5.1 percent year-on-year growth in the third quarter.
Some analysts said the economy's strongest growth period has already passed as companies run into capacity shortages, growth in its main trade partners slows and trade risks grow. The Czech statistics office said domestic activity was key on the demand side, while investments from the state and businesses continued to expand.
The Czech National Bank has lifted interest rates five times in 2018, including an increase at each of its last four meetings, to keep ahead of inflationary pressures in the domestic economy.
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