By Jana Mlcochova
PRAGUE, Oct 12 (Reuters) - Two Czech central bankers said on
Sunday next year's economic growth in the central European
country is likely to lag the bank's (CNB) latest forecast.
In its August quarterly prognosis the CNB assumes 2009
growth to reach 3.6 percent.
"We will present our next prognosis in the beginning of
November and I cannot predict now whether it'll be 3.3 or 3.1
percent," CNB Governor Zdenek Tuma said in a talk show on Czech
television CT24.
"However, I expect that the growth prediction will be
somewhat lower, but I do not dare to guess by how many tens of a
percentage point it will be cut."
In another televised talk show, CNB Vice Governor Miroslav
Singer said the latest market turbulence made it difficult for
the bank to deliver a credible growth forecast.
"We are reassessing growth (forecast) but we are aware that
it does not have much value until we know how the situation
outside calms down," Singer said.
When asked whether growth forecasts in the bank's August
prognosis were still realistic, Singer said: "I would say growth
(will be) below this, according my personal (estimate)."
The Finance Ministry, which makes its own macroeconomic
estimates as the basis for crafting the country's state budget,
expects 2009 growth of 4.8 percent, a number that the Finance
Minister Miroslav Kalousek called "overly optimistic" in view of
the latest financial markets woes.
Czech growth, which is dependent on trade, slowed to 4.6
percent year-on-year in the second quarter from 6.6 percent in
2007 as a whole and cooling European economic activity is
expected to dent exports further.
Deputy Finance Minister Eduard Janota said on the CT24 talk
show that the ministry's latest calculations suggested 2009
growth should slacken to between 3.6 percent and 3.8 percent
next year.
"We assume that if it's 3.7 percent then we will have to
revise the budget in the order of 10 billion crowns ($555.6
million) to 12 billion crowns," Janota said.
Kalousek has said a 1 percentage point drop in growth would
result in a budget revenue gap of up to 10 billion crowns, which
the government would offset with spending cuts in order to keep
the public sector deficit at 1.6 percent of gross domestic
product (GDP).
RATES
The Czechs became the first in the region to turn the
interest rate cycle with a 25 basis point cut in August to 3.50
percent.
CNB's Tuma said in the talk show that the next move in
setting rates would be a cut, should the bank decide to adjust
monetary policy conditions at its next meeting on Nov. 6.
His remarks are in line with expectations of many analysts
who say improving inflation along with an eroding growth outlook
are likely to bring more easing.
Commenting on the country's prospects for adopting the euro,
Tuma said the financial markets constraints are likely to delay
a decision on the adoption date.
"I think we will have to take a breather, until the
financial markets calm down."
The country has abandoned its earlier target of adopting the
single currency in 2010 and the current centre-right government
has declined to set a new date.
(Editing by Greg Mahlich)
