Growth in economic activity comes in above CNB forecast in Q2
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.6% year on year in 2016 Q2. In quarter-on-quarter terms, economic activity increased by 0.9%. Compared to the CNB forecast, economic growth recorded in Q2 is 0.5 percentage point higher in both year-on-year and quarter-on-quarter terms.
The upward deviation of annual GDP growth in 2016 Q2 from the CNB forecast was due mainly to a higher contribution of foreign trade, although both exports and imports increased at a slower rate than forecasted by the CNB. The higher-than-forecasted economic growth was also fuelled by a less pronounced drop in gross capital formation. On the other hand, the expectation of a decline in government investment due to an only gradual start to the new programme period for EU funds materialised. Growth in government consumption was also slightly higher. By contrast, household consumption acted towards lower-than-predicted GDP growth. Seasonally adjusted household consumption surprisingly slowed in 2016 Q2, whereas the forecast had expected stable growth close to 3%
Overall, annual growth in the Czech economy slowed as expected in 2016 Q2, albeit to a lesser extent than forecasted by the CNB. According to the central bank’s forecast, the growth of the Czech economy will slow to 2.4% this year because of a temporary decline in gross capital formation due mainly to a drop in government investment co-financed from EU funds. However, the economy will continue to be supported by easy domestic monetary conditions via the weakened koruna and exceptionally low interest rates. Low oil prices and rising external demand are also fostering economic growth. GDP growth will accelerate again to 3% in the next two years.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the GDP figures for 2016 Q2
Growth in economic activity comes in above CNB forecast in Q2
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.6% year on year in 2016 Q2. In quarter-on-quarter terms, economic activity increased by 0.9%. Compared to the CNB forecast, economic growth recorded in Q2 is 0.5 percentage point higher in both year-on-year and quarter-on-quarter terms.
The upward deviation of annual GDP growth in 2016 Q2 from the CNB forecast was due mainly to a higher contribution of foreign trade, although both exports and imports increased at a slower rate than forecasted by the CNB. The higher-than-forecasted economic growth was also fuelled by a less pronounced drop in gross capital formation. On the other hand, the expectation of a decline in government investment due to an only gradual start to the new programme period for EU funds materialised. Growth in government consumption was also slightly higher. By contrast, household consumption acted towards lower-than-predicted GDP growth. Seasonally adjusted household consumption surprisingly slowed in 2016 Q2, whereas the forecast had expected stable growth close to 3%
Overall, annual growth in the Czech economy slowed as expected in 2016 Q2, albeit to a lesser extent than forecasted by the CNB. According to the central bank’s forecast, the growth of the Czech economy will slow to 2.4% this year because of a temporary decline in gross capital formation due mainly to a drop in government investment co-financed from EU funds. However, the economy will continue to be supported by easy domestic monetary conditions via the weakened koruna and exceptionally low interest rates. Low oil prices and rising external demand are also fostering economic growth. GDP growth will accelerate again to 3% in the next two years.
Tomáš Holub, Executive Director, Monetary Department