Growth in economic activity comes in above CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.8% year on year in 2011 Q1. In quarter-on-quarter terms, it was up by 0.9%.
Compared to the current CNB forecast, the reported growth in economic activity in 2011 Q1 is about 0.5 percentage point higher in both year-on-year and quarter-on-quarter terms.
The higher-than-forecasted year-on-year GDP growth was a result of faster-than-expected growth in gross capital formation owing to higher additions to inventories. By contrast, lower-than-expected growth in economic activity was fostered by a fall in government consumption, whereas the CNB had expected a slight rise. The CNB had also been expecting fiscal restriction not to be reflected in a year-on-year decline in government consumption expenditure until the second quarter of this year. The developments in Q1 confirmed the CNB’s expectations that the modest annual decline in household consumption would be affected by budget consolidation measures amid an only slow recovery in the labour market. Growth in foreign goods and services trade turnover was much higher than assumed by the CNB. This reflected unexpectedly fast growth in demand in the Czech Republic’s major trading partner countries, Germany in particular. In the end, however, the annual rise in net exports was in line with the CNB’s expectations.
Overall, the CNB’s expectations that annual GDP growth would slow somewhat were not confirmed in Q1, as economic growth picked up slightly in both year-on-year and quarter-on-quarter terms. The main reason is that the inventory cycle recovery is fading more slowly than the CNB had expected. By contrast, the assumption that final domestic demand will remain subdued this year and that growth will be driven chiefly by net exports is being confirmed.
According to the current CNB forecast, the Czech economy will see slowing growth this year (to 1.5%) owing to a downswing in domestic demand (as a result of fiscal consolidation and fading investment in inventories) and external growth. In 2012, however, the contributions of all domestic demand components to GDP growth will increase, so the pace of GDP growth will increase overall to 2.8%, despite a smaller contribution of net exports.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2011 Q1
Growth in economic activity comes in above CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.8% year on year in 2011 Q1. In quarter-on-quarter terms, it was up by 0.9%.
Compared to the current CNB forecast, the reported growth in economic activity in 2011 Q1 is about 0.5 percentage point higher in both year-on-year and quarter-on-quarter terms.
The higher-than-forecasted year-on-year GDP growth was a result of faster-than-expected growth in gross capital formation owing to higher additions to inventories. By contrast, lower-than-expected growth in economic activity was fostered by a fall in government consumption, whereas the CNB had expected a slight rise. The CNB had also been expecting fiscal restriction not to be reflected in a year-on-year decline in government consumption expenditure until the second quarter of this year. The developments in Q1 confirmed the CNB’s expectations that the modest annual decline in household consumption would be affected by budget consolidation measures amid an only slow recovery in the labour market. Growth in foreign goods and services trade turnover was much higher than assumed by the CNB. This reflected unexpectedly fast growth in demand in the Czech Republic’s major trading partner countries, Germany in particular. In the end, however, the annual rise in net exports was in line with the CNB’s expectations.
Overall, the CNB’s expectations that annual GDP growth would slow somewhat were not confirmed in Q1, as economic growth picked up slightly in both year-on-year and quarter-on-quarter terms. The main reason is that the inventory cycle recovery is fading more slowly than the CNB had expected. By contrast, the assumption that final domestic demand will remain subdued this year and that growth will be driven chiefly by net exports is being confirmed.
According to the current CNB forecast, the Czech economy will see slowing growth this year (to 1.5%) owing to a downswing in domestic demand (as a result of fiscal consolidation and fading investment in inventories) and external growth. In 2012, however, the contributions of all domestic demand components to GDP growth will increase, so the pace of GDP growth will increase overall to 2.8%, despite a smaller contribution of net exports.
Tomáš Holub, Executive Director, Monetary and Statistics Department