Annual growth in economic activity comes in significantly above CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 4.2% year on year in 2015 Q1. Economic activity in quarter-on-quarter terms increased by 3.1%. Compared to the CNB forecast, the rise in economic activity recorded in Q1 was 2.3 percentage points higher in both year-on-year and quarter-on-quarter terms.
The significant acceleration of quarterly and annual GDP growth in 2015 Q1 was largely due to a sharp increase in collection of excise duty on tobacco products. This was linked with renewed growth in inventories of these products following a sizeable decrease at the close of last year. The decrease had been due to a legislative change limiting frontloading in the event of an increase in excise duty on tobacco products. Quarterly growth in gross value added, which is not affected by changes in excise duty collection, was markedly lower than GDP growth in Q1, reaching 1.6%. However, even this is a high figure, confirming robust growth of the Czech economy. Gross value added growth accelerated to 3.8% year on year.
On the demand side, the main cause of the considerably stronger annual GDP growth compared to the CNB forecast was a sharp rise in inventories. Total gross capital formation therefore increased much more strongly than the CNB had expected, although annual growth in fixed investment was slightly lower than forecasted. The year-on-year growth in household consumption exceeded the CNB’s expectations. The growth rates of exports and imports of goods and services were also higher than forecasted. The year-on-year decrease in total net exports was somewhat smaller than expected by the forecast. By contrast, annual growth in government consumption was lower than forecasted.
Overall, the outcome significantly exceeded the expectations of the CNB, which had predicted that annual economic growth would accelerate in 2015 Q1, but to a significantly lower extent. According to the CNB forecast, the economy will continue to grow this year. Accelerating external demand, low oil prices, easy domestic monetary conditions via the weakened koruna and exceptionally low interest rates, and a rise in government investment will lead to GDP growth of 2.6% this year according to the forecast. Economic growth will accelerate further to 3.2% next year despite falling government investment, thanks mainly to a further pick-up in external demand growth.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the GDP figures for 2015 Q1
Annual growth in economic activity comes in significantly above CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 4.2% year on year in 2015 Q1. Economic activity in quarter-on-quarter terms increased by 3.1%. Compared to the CNB forecast, the rise in economic activity recorded in Q1 was 2.3 percentage points higher in both year-on-year and quarter-on-quarter terms.
The significant acceleration of quarterly and annual GDP growth in 2015 Q1 was largely due to a sharp increase in collection of excise duty on tobacco products. This was linked with renewed growth in inventories of these products following a sizeable decrease at the close of last year. The decrease had been due to a legislative change limiting frontloading in the event of an increase in excise duty on tobacco products. Quarterly growth in gross value added, which is not affected by changes in excise duty collection, was markedly lower than GDP growth in Q1, reaching 1.6%. However, even this is a high figure, confirming robust growth of the Czech economy. Gross value added growth accelerated to 3.8% year on year.
On the demand side, the main cause of the considerably stronger annual GDP growth compared to the CNB forecast was a sharp rise in inventories. Total gross capital formation therefore increased much more strongly than the CNB had expected, although annual growth in fixed investment was slightly lower than forecasted. The year-on-year growth in household consumption exceeded the CNB’s expectations. The growth rates of exports and imports of goods and services were also higher than forecasted. The year-on-year decrease in total net exports was somewhat smaller than expected by the forecast. By contrast, annual growth in government consumption was lower than forecasted.
Overall, the outcome significantly exceeded the expectations of the CNB, which had predicted that annual economic growth would accelerate in 2015 Q1, but to a significantly lower extent. According to the CNB forecast, the economy will continue to grow this year. Accelerating external demand, low oil prices, easy domestic monetary conditions via the weakened koruna and exceptionally low interest rates, and a rise in government investment will lead to GDP growth of 2.6% this year according to the forecast. Economic growth will accelerate further to 3.2% next year despite falling government investment, thanks mainly to a further pick-up in external demand growth.
Tomáš Holub, Executive Director, Monetary Department