INSTANT VIEW 3-Czech Q2 GDP up 0.1 q/q, down 5.5 pct yr/yr

                                
 PRAGUE, Sept 8 (Reuters) - The Czech economy fell by a real
5.5 percent on an annual basis in the second quarter, the
statistical bureau said on Tuesday, deeper than an August 14
flash estimate showing a drop of 4.9 percent.
                                
 It was the deepest drop since 1993, the bureau said.
                                
 The economy rose by 0.1 percent from the first quarter, less
than the preliminary estimate showing an increase of 0.3
percent.
                                
 The Czech year-on-year contraction was worse than the
decline in neighbouring Slovakia, which posted 5.3 percent
year-on-year drop in April-June, but better than a 7.5 percent
drop in Hungary. [ID:nBUD005120]
                                
 Poland was the only country in the region to buck the trend
with 1.1 percent growth.
                                
 The statistical bureau also revised first-quarter estimate
to a decline of 4.5 percent from 3.4 percent, and changed
fourth-quarter figure to a growth of 0.5 percent from a 0.1
percent decline. 
****************************************************************
KEY POINTS:
CZECH Q2 GDP (pct)             Q/Q         YR/YR
 Real change                   0.1          -5.5

CENTRAL BANK FORECAST: Second-quarter GDP decline of 4.5
percent, released in its most recent projection unveiled in
August.

 (For full table of Q2 GDP data................[ID:nPRA004741])

 - The supply side of the economy was boosted by the
manufacturing industry which grew 1.3 percent in the second
quarter after a 9.5 percent drop in the first quarter.
 - The construction industry grew 2.6 percent in the second
quarter from the first quarters, the bureau said.
 - Foreign trade balance was 7.8 percent worse year-on-year in
real terms, the bureau said.
 - Fixed capital formation plunged 24.9 percent year-on-year,
mainly due to a drop in inventories.
                                

COMMENTARY:
                                
 HELENA HORSKA, ANALYST, RAIFFEISENBANK
                                
 "I would say it is negative because the recession was deeper
than expected."
                                
 "On the other side, it was good that the biggest drop was in
inventories which may rise in the next quarters. But the
recession is deep and the central bank made a good decision to
cut rates in the summer."
                                
 "The future is still optimistic but still uncertain, and I
would expect a negative contribution of domestic households
which now is still in a positive figure."
                                
 "Also, this data is negative news for Czech crown... I would
now sell the crown versus Polish zloty, for example."
                                
 
                                
 PETR DUFEK, ANALYST, CSOB
                                
 "It is much worse than what the original numbers indicated,
which is not only the second quarter but also the first one,
when GDP fell much faster than originally stated."
                                
 "On the other hand it is possible to say that the economy is
past the worst."
                                
 "As for the structure, the tendency does not change:
Household consumption is slowing, government consumption is
accelerating, investment slumps significantly and inventories
are disappearing."
                                
 "Foreign trade had only a mildly negative effect despite a
significant drop in exports."
                                
 
                                
 JIRI SKOP, ANALYST, KOMERCNI BANKA
                                
 "There is still slight growth quarter-on-quarter.
Year-on-year data was affected by revisions in the previous
quarter."
                                
 "Quarter-on-quarter is more important now going out of the
recession. There is still slight growth so technically the
economy is heading out of recession since Q2. Growth prospects
look better in the second half this year."
                                
 
MARKET REACTION:
                                
 The crown currency was little changed at 25.485 <EURCZK=>
from 25.49 ahead of the data.
                                
 
BACKGROUND:
- For story on analysts' expectations before the data release,
double click on...................[ID:nL2480068].[ID:nL7263440]
- Slovak Q2 GDP..................................[ID:nL2474773]
- Poland's Q2 GDP................................[ID:nLS581086]
- Hungary's Q2 GDP..............................[ID:nBUD002xxx]

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                 [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                <CZKVIEW>
- Czech money guide                                      <CZK/1>
- Czech benchmark state bond prices                   <0#CZBMK=>
- Czech forward money market rates                      <CZKFRA>

 (Reporting by Jana Mlcochova)