Growth in economic activity comes in below CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 1.2% year on year in 2011 Q3, while recording a decrease of 0.1% in quarter-on-quarter terms. Compared to the current CNB forecast, the reported growth in economic activity in 2011 Q3 is about 0.5 percentage point lower in year-on-year terms and 0.3 percentage point lower in quarter-on-quarter terms. The difference in the year-on-year and quarter-on-quarter deviations from the forecast reflects a revision of the quarterly national accounts time series since 1995, which was also published by the CZSO today and is related to the recent revision of the annual national accounts.
The lower-than-forecasted annual GDP growth overall in 2011 Q3 was due to minor deviations of actual growth from the forecast in all segments of demand. The CNB’s expectations of a continuing modest annual decline in household consumption and a deeper fall in government consumption were fulfilled to a large extent. These two components of domestic demand thus continue to reflect fiscal restriction. In addition to the approved budget consolidation measures, household consumption is being depressed by a still only slow recovery on the labour market. Instead of stagnating as expected, gross fixed capital formation dropped by almost 2% year on year. As regards the fulfilment of the forecast, however, this fall was almost entirely offset by a smaller-than-expected contribution of additions to inventories. The year-on-year growth rates of real exports and imports of goods and services only slightly exceeded the CNB’s expectations. The significantly positive contribution of the year-on-year change in net exports to GDP growth was also only slightly smaller than the CNB forecast.
Overall, the CNB’s expectations that annual GDP growth would slow further in the course of this year as a result of fading investment in inventories and fiscal consolidation amid a gradual slowdown in external demand have been confirmed. Net exports will be the main source of growth which is forecasted to reach 2% for 2011 as a whole.
According to the baseline scenario of the current forecast, GDP growth will slow in 2012 (to 1.2%). Net exports will show a negative contribution due to a slowdown abroad, whereas domestic demand will grow slightly. An alternative scenario was also drawn up. It assumes stagnating economic activity in the “effective” euro area. This assumption was reflected in a greater expected cooling of domestic economic activity. Czech GDP growth in 2012 is 1.6 percentage point lower in the alternative scenario than in the baseline scenario and is therefore slightly negative (-0.4%).
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2011 Q3
Growth in economic activity comes in below CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 1.2% year on year in 2011 Q3, while recording a decrease of 0.1% in quarter-on-quarter terms. Compared to the current CNB forecast, the reported growth in economic activity in 2011 Q3 is about 0.5 percentage point lower in year-on-year terms and 0.3 percentage point lower in quarter-on-quarter terms. The difference in the year-on-year and quarter-on-quarter deviations from the forecast reflects a revision of the quarterly national accounts time series since 1995, which was also published by the CZSO today and is related to the recent revision of the annual national accounts.
The lower-than-forecasted annual GDP growth overall in 2011 Q3 was due to minor deviations of actual growth from the forecast in all segments of demand. The CNB’s expectations of a continuing modest annual decline in household consumption and a deeper fall in government consumption were fulfilled to a large extent. These two components of domestic demand thus continue to reflect fiscal restriction. In addition to the approved budget consolidation measures, household consumption is being depressed by a still only slow recovery on the labour market. Instead of stagnating as expected, gross fixed capital formation dropped by almost 2% year on year. As regards the fulfilment of the forecast, however, this fall was almost entirely offset by a smaller-than-expected contribution of additions to inventories. The year-on-year growth rates of real exports and imports of goods and services only slightly exceeded the CNB’s expectations. The significantly positive contribution of the year-on-year change in net exports to GDP growth was also only slightly smaller than the CNB forecast.
Overall, the CNB’s expectations that annual GDP growth would slow further in the course of this year as a result of fading investment in inventories and fiscal consolidation amid a gradual slowdown in external demand have been confirmed. Net exports will be the main source of growth which is forecasted to reach 2% for 2011 as a whole.
According to the baseline scenario of the current forecast, GDP growth will slow in 2012 (to 1.2%). Net exports will show a negative contribution due to a slowdown abroad, whereas domestic demand will grow slightly. An alternative scenario was also drawn up. It assumes stagnating economic activity in the “effective” euro area. This assumption was reflected in a greater expected cooling of domestic economic activity. Czech GDP growth in 2012 is 1.6 percentage point lower in the alternative scenario than in the baseline scenario and is therefore slightly negative (-0.4%).
Tomáš Holub, Executive Director, Monetary and Statistics Department