Growth in economic activity comes in very slightly below CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.7% year on year in 2014 Q2. GDP was unchanged in quarter-on-quarter terms. Compared to the CNB forecast, the reported increase in economic activity in 2014 Q2 is 0.1 percentage point lower in year-on-year terms and 0.2 percentage point lower in quarter-on-quarter terms.
The resulting minor downward deviation of annual GDP growth from the CNB forecast in Q2 reflected several moderate contrary factors. Expectations of a marked rise in investment growth were fulfilled, although the observed increase in gross fixed investment was rather lower than forecasted. However, this deviation was almost fully offset by stronger-than-forecasted additions to inventories, so growth in overall gross capital formation was only slightly lower than in the forecast. The contribution of government consumption was also somewhat below expectations. By contrast, household consumption was slightly higher than forecasted and its annual growth accelerated further to 1.9%. A slightly negative contribution of net exports, reflecting a rebound in import-intensive inventories for production, was broadly in line with the forecast.
Overall, the CNB’s expectations that annual GDP growth would be only slightly lower in 2014 Q2 than in Q1 and would be driven by domestic demand components thus materialised. At the same time, the new data confirm that the recovery in household consumption and fixed investment growth observed at the end of last year is sustained in nature and is associated with a positive change in the expectations of domestic economic agents. This change was due – in addition to a recovery in external demand – to the easing of monetary policy by the CNB via the weakening of the koruna. The current CNB forecast therefore expects the Czech economy to grow noticeably this year after having declined in the previous two years. Accelerating growth in external demand and easy monetary conditions, coupled with higher government investment, will lead to GDP growth of almost 3%. In the following two years, the economy will record similar growth rates.
Petr Vojtíšek, Deputy Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2014 Q2
Growth in economic activity comes in very slightly below CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.7% year on year in 2014 Q2. GDP was unchanged in quarter-on-quarter terms. Compared to the CNB forecast, the reported increase in economic activity in 2014 Q2 is 0.1 percentage point lower in year-on-year terms and 0.2 percentage point lower in quarter-on-quarter terms.
The resulting minor downward deviation of annual GDP growth from the CNB forecast in Q2 reflected several moderate contrary factors. Expectations of a marked rise in investment growth were fulfilled, although the observed increase in gross fixed investment was rather lower than forecasted. However, this deviation was almost fully offset by stronger-than-forecasted additions to inventories, so growth in overall gross capital formation was only slightly lower than in the forecast. The contribution of government consumption was also somewhat below expectations. By contrast, household consumption was slightly higher than forecasted and its annual growth accelerated further to 1.9%. A slightly negative contribution of net exports, reflecting a rebound in import-intensive inventories for production, was broadly in line with the forecast.
Overall, the CNB’s expectations that annual GDP growth would be only slightly lower in 2014 Q2 than in Q1 and would be driven by domestic demand components thus materialised. At the same time, the new data confirm that the recovery in household consumption and fixed investment growth observed at the end of last year is sustained in nature and is associated with a positive change in the expectations of domestic economic agents. This change was due – in addition to a recovery in external demand – to the easing of monetary policy by the CNB via the weakening of the koruna. The current CNB forecast therefore expects the Czech economy to grow noticeably this year after having declined in the previous two years. Accelerating growth in external demand and easy monetary conditions, coupled with higher government investment, will lead to GDP growth of almost 3%. In the following two years, the economy will record similar growth rates.
Petr Vojtíšek, Deputy Executive Director, Monetary and Statistics Department