Growth in economic activity comes in below CNB forecast at end of last year
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 4% year on year in 2015 Q4. In quarter-on-quarter terms, economic activity remained unchanged. In 2015 as a whole, GDP increased by 4.3%. Compared to the CNB forecast, the reported economic growth in 2015 Q4 is 1.3 percentage points lower in year-on-year terms and 1 percentage point lower in quarter-on-quarter terms. This difference in the year-on-year and quarter-on-quarter deviations from the CNB forecast is due to a minor revision of the GDP time series for the previous quarters.
The downward deviation of annual GDP growth in 2015 Q4 from the CNB forecast was due to significantly slower growth in gross capital formation, as both growth in fixed investment and inventories lagged behind the CNB’s expectations. The more modest growth in fixed investment is likely due to an earlier-than-expected completion of projects co-financed from the previous programme period for drawing down EU funds. Along with an only gradual start of the new programme period, the slower rise in fixed investment seems to be occurring somewhat earlier than expected by the CNB. The growth rate of exports of goods and services was also lower than forecasted. However, growth in imports was much slower than forecasted. As a result, net exports increased slightly year on year, whereas the CNB had expected them to decrease slightly. Annual growth in government consumption was also slightly above the CNB forecast. Household consumption growth was broadly in line with the forecast.
Overall, fast annual GDP growth continued into 2015 Q4, although its pace was more moderate than expected by the CNB. According to the central bank’s forecast, growth of the Czech economy will slow to 2.7% this year, owing to a temporary decrease in gross capital formation, which will reflect mainly a drop in government investment 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. A further decrease in the oil price and rising external demand are also fostering economic growth. Growth will pick up to 3% in 2017, with positive contributions coming from all components of domestic demand.
Petr Král, Deputy Executive Director, Monetary Department
The CNB comments on the GDP figures for 2015 Q4
Growth in economic activity comes in below CNB forecast at end of last year
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 4% year on year in 2015 Q4. In quarter-on-quarter terms, economic activity remained unchanged. In 2015 as a whole, GDP increased by 4.3%. Compared to the CNB forecast, the reported economic growth in 2015 Q4 is 1.3 percentage points lower in year-on-year terms and 1 percentage point lower in quarter-on-quarter terms. This difference in the year-on-year and quarter-on-quarter deviations from the CNB forecast is due to a minor revision of the GDP time series for the previous quarters.
The downward deviation of annual GDP growth in 2015 Q4 from the CNB forecast was due to significantly slower growth in gross capital formation, as both growth in fixed investment and inventories lagged behind the CNB’s expectations. The more modest growth in fixed investment is likely due to an earlier-than-expected completion of projects co-financed from the previous programme period for drawing down EU funds. Along with an only gradual start of the new programme period, the slower rise in fixed investment seems to be occurring somewhat earlier than expected by the CNB. The growth rate of exports of goods and services was also lower than forecasted. However, growth in imports was much slower than forecasted. As a result, net exports increased slightly year on year, whereas the CNB had expected them to decrease slightly. Annual growth in government consumption was also slightly above the CNB forecast. Household consumption growth was broadly in line with the forecast.
Overall, fast annual GDP growth continued into 2015 Q4, although its pace was more moderate than expected by the CNB. According to the central bank’s forecast, growth of the Czech economy will slow to 2.7% this year, owing to a temporary decrease in gross capital formation, which will reflect mainly a drop in government investment 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. A further decrease in the oil price and rising external demand are also fostering economic growth. Growth will pick up to 3% in 2017, with positive contributions coming from all components of domestic demand.
Petr Král, Deputy Executive Director, Monetary Department