PRAGUE, Aug 14 (Reuters) - The Czech economy unexpectedly
rebounded in the second quarter, growing 0.3 percent over the
previous three months and beating analysts' expectations for a
drop of 0.4 percent, data showed on Friday.
Gross domestic product in the second quarter, though, fell
by a higher-than-expected 4.9 percent in real terms versus a
year earlier, a record drop.
The Statistics Office said said the flash data had been
swayed by revisions to GDP data from 2008 and the first quarter
of 2009. But it added the revisions were not yet complete and
would be released with final second quarter GDP on Sept. 8.
"We included information that we did not have in the spring
about 2008 and that we of course did not have about the first
quarter," Jan Heller, CSU's head of quarterly national accounts
department, told Reuters.
The market had expected a seasonally-adjusted year-on-year
fall of 4.5 percent, following a first quarter drop of 3.4
percent.
The statistics did not release a breakdown of its flash GDP
estimate, but said the steep annual drop was mainly due to a
fall in industry as global demand suffered in the economic
crisis.
The Czech figure was better than in neighbouring Slovakia,
which posted a 5.3 percent fall from April to June, and outpaced
Hungary, which reported a 7.6 percent contraction.
****************************************************************
KEY POINTS:
(pct change) Q2/09 Q1/09 Fcast Q2
year/year -4.9 -3.4 -4.5
* Statistics bureau says drop mainly driven by a fall in
manufacturing.
* Foreign demand drop behind manufacturing weakness.
* The Czech Statistics Office will release full details on
Sept. 8.
MARKET REACTION:
The Czech crown was unchanged following the data, bid at
25.805 per euro.
COMMENT:
MIROSLVA PLOJHAR, EMEA ECONOMIST, JP MORGAN
"It is broadly in line with (data) that is coming out of
Germany, our main trading partner. The German economy found a
floor... it means that the Czech economy found a floor probably
not much later than Germany's."
"If it (proves) that the German economy rebounds, then the
Czech economy will not lag that rebound."
SIMON QUIJANO EVANS, CEE ECONOMIST, CHEUVREUX
"The latest real economy data tells us that there has been a
worsening, for example the (June) retail sales that also
surprised on the downside. The one-off effects of the car scrap
subsidies are expected to fade out in the second half of this
year."
"On balance, with unemplomyment increasing, the private
consumption picture is obviously becoming that much more
blurred."
"The main challenge will be to get a smooth transition
between government economic activity to private sector activity.
There's still quite a challenge ahead because of rising
unemployment across eastern Europe."
RAFFAELLA TENCONI, CHIEF ECONOMIST, WOOD & CO.
"The preliminary figure suggests net exports didn't pick up
as much as expected. It introduces a slight downside risk to the
latest CNB forecast and therefore adds to our view of a
potential final rate cut before year end."
"The divergence, though, is not large enough to trigger any
immediate response from the MPC."
MARTIN LOBOTKA, ANALYST, CESKA SPORITELNA
"The quarterly growth is no surprise; it reflects the
development in euro zone. It would have been a surprise before
the European data yesterday. "
"Germany was helped by its government and the scrap
subsidy... and Germany helped us."
STANISLAVA PRAVDOVA, ANALYST, DANSKE BANK
"The year-on-year number was definitely worse than we
expected and worse than the consensus. I think the main reason
is consumer spending."
"Private demand still contributed positively in the first
quarter, but in the second quarter we don't have that effect any
more because we having rising unemployment and stagnating real
wage growth."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"Further deterioration in the pace of annual decline of
gross domestic product was expected and the actual number is
even worse than anticipated."
"We expect that the details, once released, will show that
the contribution of private consumption and gross fixed capital
formation was worse than in the first quarter, while the
contribution of net exports and inventories somewhat improved."
Currently we see improvement in business sentiment
indicators and also in hard data from major export markets, so
we believe that the pace of contraction of Czech economy will
soften in second half of the year."
"Nevertheless, economic recession and prospect of only
gradual recovery have negative implications for the public
finance outlook and, therefore, although contracting gross
domestic product implies that also demand-side inflationary
pressures will remain muted, the fiscal implications resulting
from economic recession are actually negative news for longer
maturities in domestic bond market."
BACKGROUND:
- For story on analysts' expectations before the data release,
double click on []
- Slovak Q2 GDP []
- Hungary's Q2 GDP []
LINKS:
- For further details on second 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 <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)
