CEE ECONOMY-Czech growth maintains pace in Q4, this year's pick-up clouded by Germany, US

Moneta Money Bank, A.s

31/01/2025 09:27

(Adds MONETA CEO, analyst, background in paragraphs 8-15)
    By Jan Lopatka
       PRAGUE, Jan 31 (Reuters) - The Czech economy grew by
half a percent on a quarterly basis in the fourth quarter of
2024, preliminary data showed on Friday, as domestic demand
drove a modest recovery.
    The expansion was the same as in the previous quarter and
put year-on-year gross domestic product growth at 1.6%, up from
1.4%. The data was exactly in line with expectations in a
Reuters poll of analysts.
    The Czech economy has been on a slow recovery path since
stagnating in 2023, when surging inflation hit households'
spending power hard.
    Consumer demand is increasing as wages grow, but companies
are still facing a dearth of orders, especially from Germany,
where the economy is sputtering.
    "Growth was supported by domestic demand, mainly higher
expenditure for final household consumption," CSU chief of
national accounts Vladimir Kermiet said. "Foreign demand
declined."
    The statistics office said full-year growth in 2024 reached
1.0%. Services drove growth in the fourth quarter, mainly in
trade, transport, accommodation and gastronomy, while industry
extended a decline.
    Elsewhere in the region, data on Thursday had showed Hungary
exited a technical recession in the fourth quarter due to growth
in services, while full-year data from Poland showed household
spending boosted growth in 2024 more than expected.    
    
    RISK FROM TARIFFS, GERMANY
    The Czech finance ministry on Thursday forecast growth to
accelerate to 2.3% this year due to better household demand and
recovering investments.
    Consumption would likely drive growth this year as well, as
well as investments helped by last year's drop in central bank
interest rates to 4%, said BHS Securities chief economist Stepan
Krecek.
    "But risks come from abroad. We can be knocked down by
tariff wars and the poor condition of Germany," he said in a
note. 
    MONETA Money Bank  MONET.PR  Chief Executive Tomas Spurny
said the economy would suffer more than the 0.5% hit to growth,
estimated by the finance ministry, if the United States imposed
tariffs on Europe.
    He said anecdotal evidence of closures of foreign-owned
manufacturing plants and cooling of the labour market through 
less demand for hiring was also a warning sign for economic
prospects.
    "I think this is a warning that we need to take some
structural steps on the level of the Czech economy to remain
attractive for foreign investors," Spurny said.

 (Reporting by Jan Lopatka; Editing by Emelia Sithole-Matarise
and Alex Richardson)
 ((prague.newsroom@thomsonreuters.com))