PRAGUE, June 9 (Reuters) - The Czech economy expanded by 0.5
percent in the first quarter from the previous three-month
period, significantly more than an earlier flash estimate, the
statistical bureau said on Wednesday.
On an annual basis, the economy rose by a real 1.1 percent
between January and March, a touch below a preliminary reading
of 1.2 percent released on May 12.
In other data, consumer prices rose 0.1 percent in May from
April, putting the annual inflation rate at 1.2 percent.
The annual economic growth was mainly due to a increase in
manufacturing, especially in the key automotive sector.
The Czech year-on-year growth was worse than the growth in
neighbouring Slovakia, which posted 4.8 percent year-on-year
rise in January-March and Poland's 3.0 percent year-on-year
growth. It was better than a 0.1 percent drop in Hungary.
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KEY POINTS:
CZECH Q1 GDP (pct) Q/Q YR/YR
Real change 0.5 (0.2) 1.1 (1.2)
CONSUMER INFLATION 05/10 04/10 05/09
pct change month/month 0.1 0.3 0.0
pct change year/year 1.2 1.1 1.3
CENTRAL BANK FORECAST: The central bank had forecast an annual
first-quarter GDP growth of 1.8 percent in its most recent
projection unveiled in May. In its quarterly forecast, it also
saw May annual inflation at 0.9 percent, while analysts in a
Reuters poll saw it at 1.2 percent.
The bank cut interest rates to a record low of 0.75 percent
on May 6.
Details of Q1 GDP data..........................[]
Details of May inflation data...................[]
BACKGROUND:
- Market expectations before release []
- Slovak Q1 GDP..................................[]
- Poland's Q1 GDP................................[]
- Hungary's Q1 GDP...............................[]
- Report on last Czech c.bank rate decision......[]
[] [] [] []
DETAILS:
- Data show the economy hit the bottom in the second quarter of
2009.
- Gross value added rose 1.3 percent year-on-year in the first
quarter, including a 7 percent rise in the manufacturing sector.
- Employment fell 0.9 percent quarter-on-quarter and 2.1
percent year-on-year.
- Government demand fell 2.7 percent quarter-on-quarter and
rose 2.0 percent year-on-year.
- Household demand rose 0.7 percent quarter-on-quarter and
dipped 0.5 percent year-on-year.
- Gross capital formation dropped by 4.5 percent year-on-year
due to less fixed investment whil einventories rose. But
compared with the previous quarter, gross capital formation
jumped 7.4 percent.
- Bigger foreign trade surplus added 1.9 percentage points to
the year-on-year GDP growth.
COMMENTARY:
JAROMIR SINDEL, CHIEF ECONOMIST, CITIBANK
"The GDP structure was as expected. Overall consumption from
the government and household remains weak. Things are driven by
foreign trade."
"(On inflation) these figures do not give any new signal for
monetary policy. The risks are balanced and they will leave
interest rates unchanged. The key risk is of course the negative
sentiment on emerging markets, which could move the crown up or
weaker."
HELENA HORSKA, ANALYST, RAIFFEISEN BANK, PRAGUE
"The numbers clearly confirm that the Czech economy has
climbed out of recession."
"Our base scenario does not count on a W-shaped recovery,
however, at the turn of 2010-2011 the pace of growth may slow."
"The revival will be slow, no meteoric rise of the economy.
For this year, we have kept our economic growth forecast at
around 1 percent."
PETR DUFEK, ANALYST, CSOB
"Consumer prices in May rose according to expectations, and
this is mainly thanks to more expensive cigarettes and fuels."
"Inflation thus didn't bring any surprises. Demand inflation
basically is not present. The absence of demand is still pushing
market prices down."
"For the CNB (national bank) nothing changes. Inflation is
not and will not be a problem in the Czech economy, so with the
biggest likelihood there will be a period of stable interest
rates."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE:
"Latest data from Germany and other euro zone countries and
Czech economic indicators show that the second quarter could be
favourable.
"We will see how the European as well as the Czech economy
end up after the budget diet."
VOJTECH BENDA, SENIOR ECONOMIST, ING COMMERCIAL BANKING
"Positive news is the reversal in household consumption,
confirmed in the quarter-on-quarter seasonally-adjusted data.
Household consumption will probably not present a major brake on
economic growth."
"The bad news is a further sharp decline in investment
spending. Limiting investment spending is lowering production
capacity for the future, which could result in a lower pace of
potential output or potentially higher inflationary pressure as
soon as economic growth revives."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"The bottom line is not too much has changed by the
revision. Most important is the year-on-year dynamic in the
first quarter shows only a minimum change versus the flash
estimate."
"There is a decline in household consumption but really not
so dramatic. There is ongoing contraction in fixed capital
formation. Both these things were expected."
"Also exports are growing faster than imports, so -- I can't
verify it not but likely external demand contributed positively
to GDP growth."
LINKS:
- For further details on first quarter GDP and May other past
inflation 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 <ECONCZ>
- Instant Views on other Czech data []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
(Reporting by Jason Hovet)
