Growth in economic activity comes in above CNB forecast in Q2
The CNB comments on the GDP figures for 2017 Q2
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 4.7% year on year in 2017 Q2. In quarter-on-quarter terms, economic activity increased by 2.5%. Compared to the CNB forecast, the economic growth recorded in Q2 was 1.2 percentage points higher in both year-on-year and quarter-on-quarter terms.
The upward deviation of annual GDP growth from the CNB forecast was due to a higher contribution of all expenditure items except government consumption. Household consumption growth accelerated above 4%, i.e. by more than forecasted. The robust growth in household consumption reflects accelerating wage growth, rising consumer optimism and still low interest rates. By contrast, government consumption growth unexpectedly slowed. Growth in gross capital formation exceeded the CNB’s expectations due to significantly faster growth in fixed investment, while the contribution of change in inventories was more negative. The breakdown of fixed investment reveals a pronounced rise in private investment and a recovery in government investment. The positive contribution of net exports was also higher than forecasted. Annual export growth was slightly higher than forecasted, confirming the positive effect of rising external demand on domestic economic activity. Import growth was meanwhile slightly lower than forecasted, which is surprising in a situation of faster growth in domestic demand.
Overall, the growth of the Czech economy accelerated significantly further in 2017 Q2, to a substantially greater extent than forecasted by the CNB. The current CNB forecast expects GDP to grow by 3.6% in 2017 and to remain slightly above 3% in the next two years. According to the forecast, GDP growth will continue to be driven mainly by robust growth in household consumption. Investment is expected to recover both in the government sector due to higher drawdown of EU funds and in the private sector. The data released today confirm this to a greater-than-expected extent. The Czech economy will continue to benefit from ongoing demand growth in the Czech Republic’s main trading partner countries. However, the positive contribution of net exports to Czech economic growth will turn negative next year as a result of appreciation of the koruna and faster growth in domestic demand.
Tomáš Holub, Executive Director, Monetary Department
Growth in economic activity comes in above CNB forecast in Q2
The CNB comments on the GDP figures for 2017 Q2
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 4.7% year on year in 2017 Q2. In quarter-on-quarter terms, economic activity increased by 2.5%. Compared to the CNB forecast, the economic growth recorded in Q2 was 1.2 percentage points higher in both year-on-year and quarter-on-quarter terms.
The upward deviation of annual GDP growth from the CNB forecast was due to a higher contribution of all expenditure items except government consumption. Household consumption growth accelerated above 4%, i.e. by more than forecasted. The robust growth in household consumption reflects accelerating wage growth, rising consumer optimism and still low interest rates. By contrast, government consumption growth unexpectedly slowed. Growth in gross capital formation exceeded the CNB’s expectations due to significantly faster growth in fixed investment, while the contribution of change in inventories was more negative. The breakdown of fixed investment reveals a pronounced rise in private investment and a recovery in government investment. The positive contribution of net exports was also higher than forecasted. Annual export growth was slightly higher than forecasted, confirming the positive effect of rising external demand on domestic economic activity. Import growth was meanwhile slightly lower than forecasted, which is surprising in a situation of faster growth in domestic demand.
Overall, the growth of the Czech economy accelerated significantly further in 2017 Q2, to a substantially greater extent than forecasted by the CNB. The current CNB forecast expects GDP to grow by 3.6% in 2017 and to remain slightly above 3% in the next two years. According to the forecast, GDP growth will continue to be driven mainly by robust growth in household consumption. Investment is expected to recover both in the government sector due to higher drawdown of EU funds and in the private sector. The data released today confirm this to a greater-than-expected extent. The Czech economy will continue to benefit from ongoing demand growth in the Czech Republic’s main trading partner countries. However, the positive contribution of net exports to Czech economic growth will turn negative next year as a result of appreciation of the koruna and faster growth in domestic demand.
Tomáš Holub, Executive Director, Monetary Department