PRAGUE, Nov 13 (Reuters) - The Czech economy grew by 0.8
percent over the previous three months in the third quarter,
slower than analysts' expectations of 1.0 percent growth, data
showed on Friday.
The worse-than-expected third-quarter reading was however
offset by revisions which brought the year-on-year drop to 4.1
percent, much below the forecast 4.8 percent.
The second-quarter drop was revised to 4.7 percent from 5.5
percent.
The statistics office did not release a breakdown of its
flash GDP estimate, but said the annual drop was mainly due to a
fall in capital formation and also weaker foreign trade as
global demand suffered in the economic crisis.
Domestic demand continued to rise slightly.
The statistics office said the economy was back at a level
last seen in the first quarter of 2007.
The Czech quarter-on-quarter figure was worse than in
neighbouring Slovakia, which posted a 1.6 percent rise over the
previous three months.
In Hungary, the economy fell 7.2 percent year-on-year in
July to September.
Separate data showed retail sales fell by 7.6 percent
year-on-year in September, more than analysts' estimates, a sign
of weakening household demand that is expected to suffer in the
coming months from a rise in unemployment.
****************************************************************
KEY POINTS:
GROSS DOMESTIC PRODUCT
(pct change) Q3/09 Q2/09 Fcast Q3
quarter/quarter 0.8 0.3 (0.1) 1.0
year/year -4.1 -4.7 (-5.5) -4.8
(change in percent) Sept Aug Sept forecast
RETAIL SALES (y/y) -7.6 -3.5 -6.0
Details of Q3 GDP data..........................[]
Details of September retail sales data..........[]
COMMENTARY:
MICHAL BROZKA, ANALYST, RAIFFEISENBANK
"The flash estimate confirmed the recession ended in the
second quarter. Revisions of previous data also showed the Czech
economy did not fall as deeply as statistical data originally
showed."
"From the market view it is a slightly positive surprise and
from monetary policy view it is an argument against a drop in
interest rates."
"However, it will be important to view the structure (of GDP
data). From retail sales released today, we can see domestic
consumption is weak. Whether we come to a reduction in interest
rates will be decided by the crown."
"The recession is behind us; we are in a phase of
stabilisation; we are waiting for the real recovery."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT:
"Recent history of Czech economy was re-written by GDP data
revisions and it is difficult to make any comment at the moment
as no details on GDP breakdown are available. While 0.8 percent
quarter-to-quarter GDP increase, reported for the third quarter,
is quite close to our assumption, the annual change is a
different case, mainly due to historical data revision. We
really have to wait until 9 December, when details on third
quarter GDP will be released.
"On headline level, today's GDP release is good news for
Czech crown. However, the situation is less clear in case of the
yield curve: on one hand we see a slower than expected annual
GDP contraction, which may dampen hopes that the Czech National
Bank could reduce its interest rates further - and this is
negative news for the bond market. On the other hand, however,
another implication may be that public finance development and
therefore borrowing needs will not be so bad next year compared
to what was expected so far, which would have positive
implications for Czech government bonds."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"At first sight it looks like a slight disappointment
because the figures are below consensus. But on the other hand
we can see previous figures revised upward so that can be the
source for a negative surprise."
"Overall, it can be seen as another sign of improvement in
the economic situation in the Czech Republic. We are out of the
woods, and now it is about the pace of recovery. It will depend
mainly on development in Germany and other countries."
"Implications on monetary policy is now the most likely
scenario is stability in interest rates."
MARKET REACTION:
Crown marginally firmer against the euro <EURCZK=> at 25.435
from 25.470 ahead of the data.
- Statistics bureau says year-on-year drop mainly driven by a
fall in capital formation and foreign trade.
- In the second quarter, the decline was revised to 4.7 percent
year-on-year from originally reported decrease of 5.5 percent.
Quarter-on-quarter growth was revised to 0.3 percent from 0.1
percent.
- In the first quarter, the decline was revised to 4.3 percent
year-on-year from decrease of 4.5 percent year-on-year and to
4.5 percent quarter-on-quarter from drop of 4.8 percent.
- The Czech Statistics Office will release full details on
December 9.
BACKGROUND:
- For story on analysts' expectations before the data release,
double click on []
- Slovak Q3 GDP []
- Hungary's Q3 GDP []
- Poland's Q2 GDP []
LINKS:
- For further details on third 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, editing by Jan Lopatka)
