GDP growth picks up in Q3

Q3 reading takes markets by surprise: According to a preliminary estimate, GDP grew 0.7% on a calendar and seasonally adjusted quarter-on-quarter basis in the third quarter, following Q2’s 0.5% expansion and exceeding market expectations of a slowdown. On an annual plus calendar and seasonally adjusted basis, GDP rose by 2.7% in Q3 (Q2: +2.6% yoy s.a.).

Private spending, fixed investment and external sector improve in Q3: The statistical office said private consumption and fixed investment—notably in construction—strengthened sequentially in Q3, likely bolstered by improved consumer confidence and lower interest rates. Moreover, the statistical office reported that the external sector strengthened. This gels with earlier data that showed that merchandise exports rose from Q2 in Q3. A complete breakdown of the reading will be made available on 28 November.

Economic growth seen stabilizing next year: Our panelists expect sequential GDP growth to tick down in Q4, before broadly stabilizing in 2026. Near-target inflation and a still-tight labor market will support household spending growth, and low interest rates should fuel a rebound in fixed investment. Moreover, stronger EU demand—supported by higher fiscal spending in top export destination Germany—will likely buttress exports. A weaker-than-expected German economy is a downside risk.

Panelist insight: Commenting on the outlook, Kevin Daly and Johan Allen, analysts at Goldman Sachs, stated: “Czech economic activity has rebounded this year after weak growth in 2022-24 in the aftermath of the 2022 energy price shock. We expect a broad-based increase in Czech growth in the coming quarters, driven by positive real wage growth boosting consumption and rising exports due to the improving European growth outlook, supported by higher German fiscal spending.”

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