INSTANT VIEW 3-Czech Q1 GDP up 6.1 pct, in line with fcast

...line with the market forecast and 
unchanged from an upwardly revised fourth-quarter rate. 
    The Czech expansion lagged the boom in neighbouring 
Slovakia, which posted 9.0 percent growth in January-March, but 
matched 6.1 percent growth in northern neighbour Poland. 
    The Czech economy still outpaced Hungary, which reported 2.7 
percent growth. 
 
KEY POINTS: 
(pct change)        Q1/07     Q4/06       Fcast Q1 
 year/year           6.1    6.1 (5.8)      6.1 
 NOTE. GDP up 1.5 percent quarter-on-quarter when adjusted for 
seasonal factors and the difference in working days. 
 
 CENTRAL BANK FORECAST: 5.6-6.0 percent GDP growth envisaged by 
its most recent projection unveiled in April. 
 
 (For full table of Q4 GDP data...................[nPRA001337]) 
 
- Growth is driven by a 6.7 percent rise household consumption, 
the strongest in 13 quarters. 
- Consumers take advantage of a 7.8 percent rise in disposable 
incomes to spend on everything from cars and household equipment 
to clothing and audio-video equipment, statistics office says. 
- Gross fixed capital formation -- or investments -- slows to a 
1.5 percent rate from a 8.1 percent rise in the fourth quarter. 
 
COMMENTARY: 
    RADOMIR JAC, CHIEF ECONOMIST, PPF ASSET MANAGEMENT, PRAGUE 
    "The Czech economy is maintaining GDP growth above its 
long-term potential.  
    "As such, the current pace of economic growth leads to a 
positive output gap and implies stronger inflationary pressures 
in Czech economy, especially as the first three months of 2007 
showed an acceleration in household consumption growth and at 
the same time very muted investment growth (gross fixed capital 
creation) plus a negative contribution of net exports.  
    "Both the dynamics of GDP and its structure on the 
expenditure side are pointing to growing inflationary risks in 
the economy and as such they are sending a signal to the central 
bank to normalise their interest rates further from the current 
low levels." 
     
    PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK, PRAGUE 
    "The increased consumption means elevated demand-pull 
inflation pressures. Once central bankers familiarise themselves 
with today's data, they will have yet another argument for 
raising interest rates by a further 25 basis points. We expect 
them to take this step with the new inflation forecast in July." 
 
 
MARKET REACTION: 
- Crown largely steady at 28.455 per euro  by 0715 GMT 
from 28.440 just before the data. 
 
BACKGROUND: 
- For story on analysts' expectations before the data release, 
double click on                                [ID:nL30315279] 
- Slovak Q1 GDP                                [ID:nL01172847] 
- Poland's Q1 GDP                              [ID:nL30715761] 
- Hungary's Q1 GDP                             [ID:nBUD002033] 
 
LINKS: 
- For further details on first 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 ECONOMY/GDP