Growth in economic activity comes in slightly below the CNB forecast in 2019 Q4
The CNB comments on the GDP figures for 2019 Q4
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 1.8% year on year in 2019 Q4. In quarter-on-quarter terms, economic activity increased by 0.3%. In 2019 as a whole, the Czech economy expanded by 2.4%.
The annual growth of the Czech economy in 2019 Q4 was 0.1 percentage point below the CNB’s forecast. The only slightly lower-than-expected GDP growth overall is a result of contrary deviations of the individual expenditure components from the forecast. In contrast to the expected slight drop, gross capital formation rose significantly year on year due to both fixed investment and change in inventories. Household consumption also grew faster than forecasted. By contrast, a significantly negative contribution of net exports fostered lower-than-forecasted GDP growth. Exports of goods and services declined markedly, whereas total imports increased somewhat. The forecast, meanwhile, had expected both sides of foreign trade turnover to be broadly flat year on year. Government consumption also grew at a slower pace compared with the forecast.
The released data confirm that Czech economy slowed markedly at the end of 2019. According to the current CNB forecast, growth in economic activity will gradually accelerate again this year due to a gradual recovery of external demand. GDP growth will continue to be driven in 2020 and 2021 mainly by rising consumption expenditure of Czech households. This will reflect continued, albeit gradually slowing, growth in their income. Fiscal policy will contribute to domestic demand growth via a rise in public sector pay, pensions and other social benefits. Government investment expenditure will also increase, supported by drawdown of EU funds. The downturn in private investment, caused by the slowdown in euro area economic growth, will drop out this year. The recovery in external demand will also be reflected in a positive contribution of net exports to growth. As a result, economic growth will accelerate gradually and moderately this year and the next.
Petr Král, Executive Director, Monetary Department
Growth in economic activity comes in slightly below the CNB forecast in 2019 Q4
The CNB comments on the GDP figures for 2019 Q4
According to the CZSO’s estimate released today, gross domestic product adjusted for price, seasonal and calendar effects rose by 1.8% year on year in 2019 Q4. In quarter-on-quarter terms, economic activity increased by 0.3%. In 2019 as a whole, the Czech economy expanded by 2.4%.
The annual growth of the Czech economy in 2019 Q4 was 0.1 percentage point below the CNB’s forecast. The only slightly lower-than-expected GDP growth overall is a result of contrary deviations of the individual expenditure components from the forecast. In contrast to the expected slight drop, gross capital formation rose significantly year on year due to both fixed investment and change in inventories. Household consumption also grew faster than forecasted. By contrast, a significantly negative contribution of net exports fostered lower-than-forecasted GDP growth. Exports of goods and services declined markedly, whereas total imports increased somewhat. The forecast, meanwhile, had expected both sides of foreign trade turnover to be broadly flat year on year. Government consumption also grew at a slower pace compared with the forecast.
The released data confirm that Czech economy slowed markedly at the end of 2019. According to the current CNB forecast, growth in economic activity will gradually accelerate again this year due to a gradual recovery of external demand. GDP growth will continue to be driven in 2020 and 2021 mainly by rising consumption expenditure of Czech households. This will reflect continued, albeit gradually slowing, growth in their income. Fiscal policy will contribute to domestic demand growth via a rise in public sector pay, pensions and other social benefits. Government investment expenditure will also increase, supported by drawdown of EU funds. The downturn in private investment, caused by the slowdown in euro area economic growth, will drop out this year. The recovery in external demand will also be reflected in a positive contribution of net exports to growth. As a result, economic growth will accelerate gradually and moderately this year and the next.
Petr Král, Executive Director, Monetary Department