Economic activity was below CNB forecast in 2012 Q3
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 1.3% year on year in 2012 Q3. In quarter-on-quarter terms, it decreased by 0.3%. Compared to the current CNB forecast, the reported change in economic activity in 2012 Q3 is about 0.5 percentage point lower in both year-on-year and quarter-on-quarter terms. In addition to the GDP data for 2012 Q3, the CZSO released an updated time series of quarterly GDP figures for 2009–2011 based on revised annual data published in October this year.
The downward deviation of GDP from the forecast was associated with the evolution of foreign trade, which still made a positive contribution to economic activity, but to a lesser extent than expected by the CNB. Annual export growth exceeded the CNB’s expectations, but the assumption of a decline in imports did not materialise. By contrast, domestic demand continued to fall sharply. However, the deviations of its components from the forecast were mostly in a slightly upward direction. More specifically, the decline in household consumption was slightly less pronounced than expected by the CNB. At the same time, contrary to the CNB’s expectations, fiscal consolidation was not reflected in a fall in government consumption, which in fact was flat in year-on-year terms. Total investment also declined slightly less than predicted. However, fixed investment decreased, whereas the CNB had forecasted that it would stabilise.
The new data pose a risk to the CNB’s current forecast towards a deeper decline in economic activity. According to the forecast, a marked slowdown in external demand and generally subdued domestic demand amid continuing fiscal consolidation will lead to a contraction in the Czech economy of almost 1% this year. All expenditure components except net exports will decrease. Next year, GDP will rise slightly amid the contrary effects of a gradual recovery in economic activity and more restrictive fiscal policy.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2012 Q3
Economic activity was below CNB forecast in 2012 Q3
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 1.3% year on year in 2012 Q3. In quarter-on-quarter terms, it decreased by 0.3%. Compared to the current CNB forecast, the reported change in economic activity in 2012 Q3 is about 0.5 percentage point lower in both year-on-year and quarter-on-quarter terms. In addition to the GDP data for 2012 Q3, the CZSO released an updated time series of quarterly GDP figures for 2009–2011 based on revised annual data published in October this year.
The downward deviation of GDP from the forecast was associated with the evolution of foreign trade, which still made a positive contribution to economic activity, but to a lesser extent than expected by the CNB. Annual export growth exceeded the CNB’s expectations, but the assumption of a decline in imports did not materialise. By contrast, domestic demand continued to fall sharply. However, the deviations of its components from the forecast were mostly in a slightly upward direction. More specifically, the decline in household consumption was slightly less pronounced than expected by the CNB. At the same time, contrary to the CNB’s expectations, fiscal consolidation was not reflected in a fall in government consumption, which in fact was flat in year-on-year terms. Total investment also declined slightly less than predicted. However, fixed investment decreased, whereas the CNB had forecasted that it would stabilise.
The new data pose a risk to the CNB’s current forecast towards a deeper decline in economic activity. According to the forecast, a marked slowdown in external demand and generally subdued domestic demand amid continuing fiscal consolidation will lead to a contraction in the Czech economy of almost 1% this year. All expenditure components except net exports will decrease. Next year, GDP will rise slightly amid the contrary effects of a gradual recovery in economic activity and more restrictive fiscal policy.
Tomáš Holub, Executive Director, Monetary and Statistics Department