Economic activity was slightly below CNB forecast in 2012 Q4
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 1.7% year on year in 2012 Q4. In quarter-on-quarter terms, it decreased by 0.2%. Compared to the current CNB forecast, the reported change in economic activity in 2012 Q4 is 0.3 percentage point lower in year-on-year terms and 0.1 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 revision of the GDP time series for the first three quarters of 2012.
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 much lesser extent than expected by the CNB. The annual growth rate of exports of goods and services was considerably lower than expected by the CNB, pointing to a significant impact of slowing external demand on the Czech economy at the end of 2012. Total imports also increased in year-on-year terms, whereas the CNB had forecasted that import growth would lag well behind export growth. The stronger-than-forecasted decline in economic activity was also due to household consumption, which recorded an even sharper year-on-year decrease than forecasted by the CNB. By contrast, a noticeably smaller-than-expected year-on-year decline in gross capital formation acted in the opposite direction. This was due to significantly better changes in inventories than assumed by the CNB, while fixed investment growth recorded a much deeper year-on-year decline than expected by the CNB. Government consumption recorded a larger year-on-year increase in 2012 Q4 than forecasted by the CNB.
The new data pose a risk to the CNB’s current forecast towards a slightly deeper decline in economic activity. According to this forecast, generally weak domestic demand, coupled with ongoing fiscal consolidation and only slowly recovering external demand, will lead to a contraction of the Czech economy of 0.3% this year. In the second half of 2013, however, economic growth will recover gradually. The previous years’ dampening effects will largely subside next year and the economy will grow by about 2%.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2012 Q4
Economic activity was slightly below CNB forecast in 2012 Q4
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 1.7% year on year in 2012 Q4. In quarter-on-quarter terms, it decreased by 0.2%. Compared to the current CNB forecast, the reported change in economic activity in 2012 Q4 is 0.3 percentage point lower in year-on-year terms and 0.1 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 revision of the GDP time series for the first three quarters of 2012.
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 much lesser extent than expected by the CNB. The annual growth rate of exports of goods and services was considerably lower than expected by the CNB, pointing to a significant impact of slowing external demand on the Czech economy at the end of 2012. Total imports also increased in year-on-year terms, whereas the CNB had forecasted that import growth would lag well behind export growth. The stronger-than-forecasted decline in economic activity was also due to household consumption, which recorded an even sharper year-on-year decrease than forecasted by the CNB. By contrast, a noticeably smaller-than-expected year-on-year decline in gross capital formation acted in the opposite direction. This was due to significantly better changes in inventories than assumed by the CNB, while fixed investment growth recorded a much deeper year-on-year decline than expected by the CNB. Government consumption recorded a larger year-on-year increase in 2012 Q4 than forecasted by the CNB.
The new data pose a risk to the CNB’s current forecast towards a slightly deeper decline in economic activity. According to this forecast, generally weak domestic demand, coupled with ongoing fiscal consolidation and only slowly recovering external demand, will lead to a contraction of the Czech economy of 0.3% this year. In the second half of 2013, however, economic growth will recover gradually. The previous years’ dampening effects will largely subside next year and the economy will grow by about 2%.
Tomáš Holub, Executive Director, Monetary and Statistics Department