Czech Q3 GDP beats forecasts with 5.8 pct growth

PRAGUE, Dec 8 (Reuters) - Czech economic growth ebbed to 5.8 percent year-on-year in the third quarter but still beat market forecasts of 5.2 percent thanks to rising investments and private spending, the Statistical Bureau (CSU) said on Friday.

Despite the slowdown, the Czech economy still ran neck-and-neck with Poland and outpaced Hungary, which reported 3.8 percent growth on Friday.

Seasonally-adjusted expansion in the third quarter was 1.4 percent compared with the previous three months, keeping the same rate since the beginning of the year.

"The contribution of foreign trade, which had been the key source of growth...is receding and is being replaced by expenditure on final consumption and capital formation," the CSU said.

Fixed capital formation, the measure of investments, rose by 7.2 percent, while household consumption rose 4 percent year-on-year.

"The development of the structure of GDP is biased toward potential inflation pressures and speaks in favour of a future raising of interest rates," said Ales Michl, an analyst at Raiffeisenbank, adding he expected a 25-basis-point tightening in the first quarter next year.

The central European country has kept interest rates at 2.5 percent, a full percentage point below the euro zone, thanks to a firming crown currency which has kept inflation in check.

The CSU said in a separate data release that consumer prices dipped 0.1 percent in November, in line with forecasts on falling prices of natural gas and motor fuel, to put the annual inflation rate at 1.5 percent.

The CSU at the same time cut its first quarter GDP growth estimate to 6.4 percent from 7.1 and second quarter expansion to 6.0 from previously reported 6.2 percent.

The crown currency slightly firmed after the data, trading at 27.96 to the euro at 0825 GMT from 27.99 ahead of the data.

(For full table of Q2 GDP data...................[nL08844200]) ((Reporting by Jan Lopatka, editing by Gill Tudor; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

Keywords: CZECH ECONOMY/GDP