Economic activity was well below CNB forecast in 2013 Q1
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 2.2% year on year in 2013 Q1. In quarter-on-quarter terms, it decreased by 1.1%. Compared to the current CNB forecast, the reported growth in economic activity in 2013 Q1 is 0.7 percentage point lower in year-on-year terms and 0.9 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 recent revision to the GDP time series for 2012.
The downward deviation of GDP from the forecast was due to a deeper-than-expected decline in gross capital formation. This reflected an unexpectedly strong decrease in inventories, while the forecasted decline in fixed investment broadly materialised. On the other hand, household consumption recorded a more moderate decline than expected by the CNB and growth in government consumption was roughly at the forecast level. The decline in exports and imports of goods and services was more moderate than expected by the CNB. In the end, however, net exports recorded a slight annual decline in line with the forecast.
The new data pose a risk to the CNB’s current forecast towards lower-than-expected economic activity this year. However, the negative surprise compared to the forecasts will focus on inventories, which are traditionally one of the most volatile components of demand. On the demand side, the decline in value added was also due to one-off factors, which may partly be offset in the remainder this year. According to the current CNB 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 0.5% this year. The economy will gradually rebound from 2013 H2 onwards. As regards components of demand, only net exports will record a noticeable positive contribution to economic activity in 2013 as a whole. Next year, the previous years’ dampening factors will largely subside and the economy will grow by 1.8%.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2013 Q1
Economic activity was well below CNB forecast in 2013 Q1
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 2.2% year on year in 2013 Q1. In quarter-on-quarter terms, it decreased by 1.1%. Compared to the current CNB forecast, the reported growth in economic activity in 2013 Q1 is 0.7 percentage point lower in year-on-year terms and 0.9 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 recent revision to the GDP time series for 2012.
The downward deviation of GDP from the forecast was due to a deeper-than-expected decline in gross capital formation. This reflected an unexpectedly strong decrease in inventories, while the forecasted decline in fixed investment broadly materialised. On the other hand, household consumption recorded a more moderate decline than expected by the CNB and growth in government consumption was roughly at the forecast level. The decline in exports and imports of goods and services was more moderate than expected by the CNB. In the end, however, net exports recorded a slight annual decline in line with the forecast.
The new data pose a risk to the CNB’s current forecast towards lower-than-expected economic activity this year. However, the negative surprise compared to the forecasts will focus on inventories, which are traditionally one of the most volatile components of demand. On the demand side, the decline in value added was also due to one-off factors, which may partly be offset in the remainder this year. According to the current CNB 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 0.5% this year. The economy will gradually rebound from 2013 H2 onwards. As regards components of demand, only net exports will record a noticeable positive contribution to economic activity in 2013 as a whole. Next year, the previous years’ dampening factors will largely subside and the economy will grow by 1.8%.
Tomáš Holub, Executive Director, Monetary and Statistics Department