The Czech economy shrunk by 1.0 percent in the first quarter of the year compared with the last three months of 2011, according to figures released by the European statistical office Eurostat.
The Czech performance is the second worst performance of the 19 EU countries for whom figures were released with only Hungry turning in a worse economic performance with a 1.3 percent contraction in the economy from January to March.
The latest Eurostat figures issued on Tuesday follow contractions of 0.1 percent quarter-on-quarter in the third and fourth quarters of 2011 and growth of 0.3 percent in the second quarter of last year.
Quarterly comparisons with the corresponding quarter of the previous year also show a contraction of 1.0 percent in the first quarter of this year following on from 0.6 percent, 1.3 percent and 2.1 growth in the previous three quarters, according to the European figures. The latest quarterly Czech growth figures are the same as the preliminary figures issued Tuesday by the Czech Statistical Office (ČSÚ).
The local statistics office that the drop was “to some extent a consequence of an extraordinary development of two otherwise relatively stable components.” The first involved a fall in the generation of gross value added at pension funds and insurance companies. The second was related to much lower excise duties on tobacco products as people stocked in the last quarter of 2011 to avoid an impending tax hike. A further fall in output from the construction sector was another factor which contributed to the shrinkage, the office added.
Czech media reported that some analysts were puzzled by the explanation for the fall in Gross Domestic Product (GDP) with some refusing to comment on it. Some said that upward revisions of the figures were likely and the overall impression was that the economy was flat rather than going hard into reverse.
Eurostat first quarter figures for Sweden, Slovenia, Poland, Malta, Luxembourg, Greece, Ireland and Denmark were not released on Tuesday. Statistics for the other countries showed almost flat growth overall.