* Czech Q3 GDP seen up 1.0 percent q/q []
* Hungarian Q3 GDP seen down 6.4 pct y/y <HUGDP1>
* Romanian Q3 GDP seen down 0.5 pct q/q []
* Slovak Q3 GDP fcast falling 5.0 pct y/y []
By Michael Winfrey
PRAGUE, Nov 11 (Reuters) - The European Union's eastern
members still showed a deep contraction in growth from July to
September versus a year earlier, although the Czechs and Slovaks
continued to grow in quarter-on-quarter terms.
Analysts expect data due out on Friday to confirm a shift
towards recovery from the-worst-is-over mode through the end of
the year due to inventory restocking and the lingering effect of
car scrap schemes, although that may falter briefly in early
2010.
The numbers from the Czech Republic, Slovakia, Romania and
Hungary are expected to show Hungary, the recipient of an
International Monetary Fund aid lifeline last year, would show
the worst contraction versus last year.
It shrank by 6.4 percent, according to a Reuters poll,
compared with 4.8 percent in the Czech Republic, 5.0 percent in
Slovakia, and 9 percent in Romania.
But despite the grim year-on-year figures, economists said
the Czechs and Slovaks would grow versus the previous three
months for the second quarter running, and they said
year-on-year growth would generally return in the first quarter
of 2010, helped by a weak base effect.
"On the surface it will be bad, but in terms of quarterly
numbers, it will be good," said Raffaella Tenconi, chief
economist at Wood & Co. "There will be mostly a contribution of
net exports, but the proportion of household spending and
domestic demand should be improving."
The European Commission sees economic contractions in the
EU's emerging east ranging from a worst-case minus 18.1 percent
in Lithuania to growth of 1.2 percent in Poland, the only member
of the bloc to avoid shrinking this year.
GAP PERIOD?
Analysts saw Czech growth of 1.0 percent from July to
September on a quarterly basis, from 0.1 percent the previous
quarter. Romania was seen shrinking 0.5 percent, from 1.2.
Analyst communities in different countries use different
references for GDP, with those in Hungary, Poland and Slovakia
forecasting mainly year-on-year figures, while the Czechs and
Romanians use both that and quarter-on-quarter.
Poland will release its third quarter number on Nov. 30,
with analysts expecting 1.3 percent growth on an annual basis,
from 1.1 the previous quarter.
Analysts said a crucial moment for central and Eastern
Europe, heavily dependent on exports to the euro zone and
especially Germany, would be in the first half of 2010.
It would be then that a restocking trend among companies
will end and west European demand for goods produced in the
low-cost east will have to take up slack to produce growth.
That was illustrated in the German ZEW investor sentiment
data, released on Tuesday []. It showed an
improvement in the current economic situation but a second
straight month in deterioration in terms of forward-looking
sentiment.
The situation in emerging Europe may also be hampered by
governments there reining in public deficits that ballooned this
year due to high social spending and lower tax revenues.
That could produce a potential gap in time from when the
main driver of the economy shifts from restocking to firms
filling new export orders, pushed by higher demand in Germany
and other west European states.
And any recovery in domestic spending in central and Eastern
Europe has to wait for that to happen first. With unemployment
expected to continue to rise next year, that means the recovery
could remain fragile until the production cycle starts up again.
"The destocking has stopped, people are reinventorizing. The
consumer is going to be the main challenge," said Cheuvreux
economist Simon Quijano. "Throughout the winter months it's
going to be bloody difficult because unemployment is
increasing."
(Reporting by Michael Winfrey; Editing by Victoria Main)
