Growth in economic activity comes in above CNB forecast in 2018 Q4
The CNB comments on the GDP figures for 2018 Q4
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 2.8% year on year in 2018 Q4. In quarter-on-quarter terms, economic activity increased by 0.9%. The Czech economy expanded by 3% in 2018 as a whole.
The economic growth recorded in 2018 Q4 was above the CNB forecast in both year-on-year and quarter-on-quarter terms. The faster-than-forecasted year-on-year GDP growth was due mainly to a less negative contribution of net exports. This was due to higher-than-expected growth in goods and services exports, whereas total imports were in line with the forecast. Government consumption also grew faster than forecasted. By contrast, household consumption was lower than forecasted, its growth slowing markedly at the end of the year. The forecast for gross capital formation was broadly in line with the forecast in both fixed investment and change in inventories.
Overall, the renewed slight acceleration of Czech economic growth, which the CNB had predicted for this year in its forecast, probably started at the end of last year. According to the current CNB forecast, the Czech economy will grow at a rate close to 3% both this year and the next. This will be consistent with the long-run equilibrium growth rate. The growth will be driven primarily by household consumption, which will mainly reflect buoyant growth in household income. In addition, economic growth will be supported by total investment. Corporate investment will continue to be motivated by rising demand and increasingly distinct labour shortages. Government investment expenditure will also grow further, as a result of higher drawdown of EU funds. Fiscal policy will also contribute to domestic demand growth this year via a significant rise in current expenditure.
Petr Král, Executive Director, Monetary Department
Growth in economic activity comes in above CNB forecast in 2018 Q4
The CNB comments on the GDP figures for 2018 Q4
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 2.8% year on year in 2018 Q4. In quarter-on-quarter terms, economic activity increased by 0.9%. The Czech economy expanded by 3% in 2018 as a whole.
The economic growth recorded in 2018 Q4 was above the CNB forecast in both year-on-year and quarter-on-quarter terms. The faster-than-forecasted year-on-year GDP growth was due mainly to a less negative contribution of net exports. This was due to higher-than-expected growth in goods and services exports, whereas total imports were in line with the forecast. Government consumption also grew faster than forecasted. By contrast, household consumption was lower than forecasted, its growth slowing markedly at the end of the year. The forecast for gross capital formation was broadly in line with the forecast in both fixed investment and change in inventories.
Overall, the renewed slight acceleration of Czech economic growth, which the CNB had predicted for this year in its forecast, probably started at the end of last year. According to the current CNB forecast, the Czech economy will grow at a rate close to 3% both this year and the next. This will be consistent with the long-run equilibrium growth rate. The growth will be driven primarily by household consumption, which will mainly reflect buoyant growth in household income. In addition, economic growth will be supported by total investment. Corporate investment will continue to be motivated by rising demand and increasingly distinct labour shortages. Government investment expenditure will also grow further, as a result of higher drawdown of EU funds. Fiscal policy will also contribute to domestic demand growth this year via a significant rise in current expenditure.
Petr Král, Executive Director, Monetary Department