Growth in economic activity slightly below the CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.2% year on year in 2011 Q2. In quarter-on-quarter terms, it was up by 0.1%.
Compared to the current CNB forecast, the reported growth in economic activity in 2011 Q2 is lower by about 0.3 percentage point in both year-on-year and quarter-on-quarter terms.
The lower annual GDP growth compared to the forecast was due to a stronger-than-expected decline in household and government consumption. The two components of domestic demand continue to reflect the fiscal restriction, with household consumption being dampened, in addition to approved budgetary consolidation measures, by a still slow recovery on the labour market. By contrast, growth in gross fixed capital formation was slightly faster than expected by the CNB, which was however more than offset by lower-than-expected additions to inventories in terms of total investment. This confirms the CNB’s assumption regarding the unwinding of the inventory replenishment cycle, which contributed significantly to domestic demand growth in previous quarters. Growth in foreign trade turnover in goods and services was much lower than assumed by the CNB. This reflected an unexpectedly sharp slowdown in demand growth the Czech Republic’s major trading partner countries. Owing to a more pronounced decline in growth in imports than in exports, net exports recorded a slightly higher annual increase than expected by the CNB.
Overall, the CNB’s expectations that annual GDP growth would slow materialised in 2011 Q2, with the slowdown being rather more pronounced than assumed by the CNB. Domestic demand remains subdued, even more than expected by the CNB. At the same time, the assumption that exports would be the main driver of growth is materialising. The structure of economic growth remains non-inflationary.
According to the current CNB forecast, annual Czech economic growth will slow in the rest of this year, reaching 2.1% for 2011 as a whole. In addition to the continued effect of fiscal consolidation and the unwinding of the inventory replenishment cycle, the slowdown will be fostered by less favourable external demand. GDP growth will increase just marginally in 2012, to 2.2%.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2011 Q2
Growth in economic activity slightly below the CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.2% year on year in 2011 Q2. In quarter-on-quarter terms, it was up by 0.1%.
Compared to the current CNB forecast, the reported growth in economic activity in 2011 Q2 is lower by about 0.3 percentage point in both year-on-year and quarter-on-quarter terms.
The lower annual GDP growth compared to the forecast was due to a stronger-than-expected decline in household and government consumption. The two components of domestic demand continue to reflect the fiscal restriction, with household consumption being dampened, in addition to approved budgetary consolidation measures, by a still slow recovery on the labour market. By contrast, growth in gross fixed capital formation was slightly faster than expected by the CNB, which was however more than offset by lower-than-expected additions to inventories in terms of total investment. This confirms the CNB’s assumption regarding the unwinding of the inventory replenishment cycle, which contributed significantly to domestic demand growth in previous quarters. Growth in foreign trade turnover in goods and services was much lower than assumed by the CNB. This reflected an unexpectedly sharp slowdown in demand growth the Czech Republic’s major trading partner countries. Owing to a more pronounced decline in growth in imports than in exports, net exports recorded a slightly higher annual increase than expected by the CNB.
Overall, the CNB’s expectations that annual GDP growth would slow materialised in 2011 Q2, with the slowdown being rather more pronounced than assumed by the CNB. Domestic demand remains subdued, even more than expected by the CNB. At the same time, the assumption that exports would be the main driver of growth is materialising. The structure of economic growth remains non-inflationary.
According to the current CNB forecast, annual Czech economic growth will slow in the rest of this year, reaching 2.1% for 2011 as a whole. In addition to the continued effect of fiscal consolidation and the unwinding of the inventory replenishment cycle, the slowdown will be fostered by less favourable external demand. GDP growth will increase just marginally in 2012, to 2.2%.
Tomáš Holub, Executive Director, Monetary and Statistics Department