Exports Pull Czechs Out of Recession as Households Spend Less

Rising export demand helped the Czech Republic exit a record-long recession in the second quarter even as household spending renewed its decline.

The economy grew 0.6 percent from the previous three months, less than the 0.7 percent preliminary estimate published three weeks ago, the Prague-based statistics office said today. Gross domestic product fell 1.3 percent from a year earlier.

Like other post-communist nations in the European Union, the Czech Republic is looking to its main trading partners in the euro area to reignite growth after government cutbacks curbed spending and investment. The $196 billion economy ended a slump that lasted for six quarters as the central bank reduced the benchmark interest rate to near zero.

“The latest data confirm the end of the Czech recession, but the emerging growth is so far driven only by foreign demand,” Petr Dufek, an analyst at CSOB AS, a unit of KBC Groep NV in Prague, said by e-mail. “Domestic demand didn’t do very well in the second quarter, and investment data were especially disappointing.”

The Czech koruna weakened 0.1 percent to 25.699 per euro as of 10:34 a.m. in Prague, extending this year’s decline against the common currency to 2.3 percent. The yield on 10-year government debt rose 2 basis points, or 0.02 percentage point, to 2.41 percent.

Household consumption dropped 0.4 percent from the first three months after two quarterly increases, while government spending fell 0.7 percent and fixed-capital creation declined 1.5 percent, the statistics office said. Exports rose 3.6 percent, outpacing a 2.5 percent increase in imports.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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