INSTANT VIEW 4-Czech Q3 GDP grows 6 pct, slightly above forecast

...percent growth in 
the second quarter. 
    The Czech expansion lagged the boom in neighbouring 
Slovakia, which posted 9.4 percent growth in July-September, as 
well as 6.4 percent growth in northern neighbour Poland. 
    However, the Czech economy outpaced the region's laggard 
Hungary, which reported 0.9 percent growth. 
**************************************************************** 
KEY POINTS: 
(pct change)        Q3/07     Q2/07       Fcast Q3 
 year/year           6.0    6.3 (6.0)      5.8 
 NOTE. GDP up 1.4 percent quarter-on-quarter when adjusted for 
seasonal factors and the difference in working days. 
 
 CENTRAL BANK FORECAST: 5.9-6.3 percent GDP growth envisaged by 
its most recent projection unveiled in October. 
 
 (For full table of Q3 GDP data...................[nPRA001651]) 
 
- The third quarter marked the 10th consecutive quarter of GDP 
growth of 6 percent or more. 
- Growth is driven by a 5.6 percent rise household consumption, 
and a 5.7 percent increase in gross fixed capital formation -- 
or investments. 
- Consumers spend most food, tobacco, holidays, and cars, 
statistics office says. 
 
COMMENTARY: 
    JIRI SKOP, ANALYST, KOMERCNI BANKA, PRAGUE 
    "The result is not surprising. As expected, consumption 
remained the main driver of this year's growth thanks to a 
strong rise in real wages, rising employment, consumer lending 
expansion, and generous pre-election (government spending) 
policy. However, this will change next year, when (fiscal) 
reforms will have a restrictive impact and real wage growth will 
also slow because of accelerating inflation. On top of that, net 
exports will probably be influenced by weakening external 
demand. After this year's average growth of slightly more than 
6.0 percent we expect a slowdown to 3.7 percent next year. 
    "For monetary policy, it is more important to look at the 
structure of growth rather than the headline number itself. 
Growth is still led by household consumption, which indicates 
demand-pull inflation pressures ... This development is quite 
expected and should not have a big impact on markets." 
     
    DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE, PRAGUE 
    "It is definitely a positive number, the structure is not 
surprising.  
    "I think that this number fits into the overall picture, 
that implies another rate hike at the beginning of the next 
quarter. I think that it will more probably serve to confirm the 
expected scenario (of policy tightening), rather than to speed 
up rate hikes." 
 
    PETR DUFEK, ANALYST, CSOB BANK, PRAGUE 
    "GDP growth is better than we had expected. As expected, the 
strong pace of economic growth is led by very strong consumption 
and investments. Consumption growth is strong, however not a 
concern, because consumption will cool off significantly at the 
start of next year due to a sharp increase in inflation. 
    "This is good news for the markets since it is showing the 
economy is doing better than expected. On the other hand, strong 
consumption will keep the CNB (central bank) vigilant and will 
revive talk of demand-pull inflation." 
 
MARKET REACTION: 
- Crown weakens to 26.160 per euro  by 0825 GMT from 
26.135 just before the data release. Bond yields and money 
market rates slightly higher, in line with euro zone markets. 
 
BACKGROUND: 
- For story on analysts' expectations before the data release, 
double click on                                [ID:nL28651725] 
- Slovak Q3 GDP                                [ID:nL30212952] 
- Poland's Q3 GDP                              [ID:nL30323616] 
- Hungary's Q3 GDP                             [ID:nBUD002267] 
 
LINKS: 
- For further details on third 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                       
 
 (Reporting by Marek Petrus) 
  
  Keywords: CZECH ECONOMY/GDP  
    

[PRAGUE/Reuters/Finance.cz]