INSTANT VIEW 4-Czech Q4 GDP growth of 5.8 pct beats mkt fcast

...previous three months, but still beat 
the market forecast of a sharper slowdown. 
    The Czech expansion lagged the boom in the neighbouring 
Slovakia, which posted 9.6 percent growth in October-December, 
as well as 6.4 percent growth in northern neighbour Poland. 
    But the Czech economy still outpaced Hungary, which reported 
3.2 percent growth. 
 
KEY POINTS: 
(pct change)        Q4/06     Q3/06       Fcast Q4 
 year/year           5.8    5.9 (5.8)      5.2 
 
 (For full table of Q4 GDP data...................[nPRA001189]) 
 
- Growth is driven by a 7.6 percent gain in fixed investment 
creation, a 5.4 percent in reviving household consumption, as 
well as a build-up of inventories. 
- Government spending at 2.6 percent. 
- Exports up 17.4 percent, imports up 18.1 percent year-on-year 
in real prices. 
 
COMMENTARY: 
    DAVID MAREK, CHIEF ANALYST, PATRIA FINANCE, PRAGUE 
    "The numbers are unlikely to result in a shift in the 
central bank's stance. There will probably be no interest rate 
change in the next few months. 
    "It is good news for the crown, which could strengthen. From 
the point of view of bond prices, this is neutral news, because 
it will not change expectations of interest rate developments." 
 
    MIROSLAV PLOJHAR, CHIEF ECONOMIST, CITIBANK, PRAGUE 
    "The number is very good. Growth will probably continue, 
even though I think it will stabilise at around 5 percent rather 
than staying around 6 percent. 
    "The fast growth in household consumption obviously smells 
of inflation, but it will not fuel inflation in itself. However, 
if the crown weakened, it would pose an inflation risk. 
    "This brings pressure on a rise in interest rates ... But I 
do not think this number would affect expectations of the timing 
of rate hikes." 
     
    ALES MICHL, ANALYST, RAIFFEISENBANK, PRAGUE 
    "The number confirms we are behind the peak and find 
ourselves in the phase of growth stabilisation around 5 percent. 
    "We are about 0.5 percentage points above potential. I would 
expect the central bank to gradually raise interest rates 
towards 3 percent at the end of the year." 
 
MARKET REACTION: 
- Crown flat at 28.140 per euro . Local currency debt 
yields mixed and little changed. 
 
BACKGROUND: 
- For story on analysts' expectations before the data release, 
double click on                                [ID:nL0578676] 
- Slovak Q4 GDP                                [ID:nL0665158] 
- Poland's Q4 GDP                             [ID:nL01611145] 
- Hungary's Q4 GDP                            [ID:nL09185608] 
 
LINKS: 
- For further details on fourth quarter GDP and past data, 
Reuters 3000 Xtra users can click on the Czech Statistical 
Bureau's website: 
    http://www.czso.cz/eng/csu.nsf/kalendar/2004-hdp 
 
- For LIVE Czech economic data releases, click on        
- Instant Views on other Czech data                 [CZ/INSTANT] 
- Overview of Czech macroeconomic indicators            [CZ/ECI] 
 
- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH] 
- For Czech money markets data click on                 
- Czech money guide                                       
- Czech benchmark state bond prices                    
- Czech forward money market rates                       
 
  
  Keywords: CZECH GDP/