Czech economy accelerates in first quarter on higher household spending

PRAGUE (Reuters) -Czech economic output jumped by a faster-than-predicted 0.8% in the first quarter, the highest since late 2021, driven by a strong rebound in household spending and inventories, the Czech Statistical Bureau (CSU) said on Friday.

The result marked an increase from a flash estimate of 0.5% expansion, and put year-on-year growth at 2.2%.

The central European economy has been slow to recover from the COVID pandemic, which was followed by an inflation wave, high energy prices and weak demand in main trade partner Germany.

A gradual rebound in real wages, as inflation waned, has been the main driver of the recovery.

The CSU said household demand contributed 1.5 percentage points to the year-on-year expansion, followed by inventory adding 1.3 points, government spending with 0.4, while foreign trade and capital investments had negative contributions.

"The year-on-year result is the best in nearly three years and was caused mainly by growing household spending," said Petr Dufek, chief economist at Banka Creditas.

"The first quarter result lays the ground quite well for the full-year growth of roughly 2%."

Chief Economist Pavel Sobisek of UniCredit CZ+SK said momentum would help the economy going forward but there would be negative effects of U.S. tariff policies.

"That will undoubtedly cause fluctuations of growth and its overall reduction versus a situation of tariffs not being imposed," he said in a note.

The crown was trading flat versus the euro at 24.945.

(Reporting by Jan Lopatka. Editing by Jane Merriman)

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