Annual growth in economic activity comes in slightly below CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.4% year on year in 2014 Q3. Economic activity in quarter-on-quarter terms increased by 0.4%. Compared to the CNB forecast, the GDP growth recorded in 2014 Q3 is 0.2 percentage point lower in year-on-year terms, whereas growth in economic activity in quarter-on-quarter terms was in line with what the CNB had forecasted. The fact that the forecast for quarterly GDP growth was fulfilled while annual economic growth was slightly lower than the CNB had expected is due to a downward GDP revision for 2014 Q2.
The resulting minor downward deviation of annual GDP growth from the CNB forecast in Q3 was due to several factors. Expectations of continuing annual growth in household consumption were fulfilled. The observed increase in fixed investment was rather lower than the CNB had forecasted. However, this deviation was more than offset by stronger-than-forecasted additions to inventories, so growth in overall gross capital formation was slightly higher than in the CNB forecast. By contrast, growth in government consumption was lower than expected. The growth rates of exports and imports of goods and services lagged somewhat behind the forecast. At the same time, net exports made a slightly negative contribution to annual GDP growth, whereas the CNB had expected the contribution to be slightly positive.
Overall, the CNB’s expectations that the economy would grow roughly at the same pace in 2014 Q3 as in the first half of the year were confirmed. The CNB’s forecast that – after contracting in the previous two years – the domestic economy will grow noticeably this year owing to higher external demand, a recovery in government investment and last but not least to the easy domestic monetary conditions in the form of a weakened exchange rate and exceptionally low interest rates, is thus being fulfilled. Next year, the economy will record the same growth rate, with fiscal policy making a significantly positive contribution owing mainly to the drawdown of EU funds. GDP growth will then pick up slightly further in 2016 (despite a decline in government investment), due mainly to rising external demand.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2014 Q3
Annual growth in economic activity comes in slightly below CNB forecast
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 2.4% year on year in 2014 Q3. Economic activity in quarter-on-quarter terms increased by 0.4%. Compared to the CNB forecast, the GDP growth recorded in 2014 Q3 is 0.2 percentage point lower in year-on-year terms, whereas growth in economic activity in quarter-on-quarter terms was in line with what the CNB had forecasted. The fact that the forecast for quarterly GDP growth was fulfilled while annual economic growth was slightly lower than the CNB had expected is due to a downward GDP revision for 2014 Q2.
The resulting minor downward deviation of annual GDP growth from the CNB forecast in Q3 was due to several factors. Expectations of continuing annual growth in household consumption were fulfilled. The observed increase in fixed investment was rather lower than the CNB had forecasted. However, this deviation was more than offset by stronger-than-forecasted additions to inventories, so growth in overall gross capital formation was slightly higher than in the CNB forecast. By contrast, growth in government consumption was lower than expected. The growth rates of exports and imports of goods and services lagged somewhat behind the forecast. At the same time, net exports made a slightly negative contribution to annual GDP growth, whereas the CNB had expected the contribution to be slightly positive.
Overall, the CNB’s expectations that the economy would grow roughly at the same pace in 2014 Q3 as in the first half of the year were confirmed. The CNB’s forecast that – after contracting in the previous two years – the domestic economy will grow noticeably this year owing to higher external demand, a recovery in government investment and last but not least to the easy domestic monetary conditions in the form of a weakened exchange rate and exceptionally low interest rates, is thus being fulfilled. Next year, the economy will record the same growth rate, with fiscal policy making a significantly positive contribution owing mainly to the drawdown of EU funds. GDP growth will then pick up slightly further in 2016 (despite a decline in government investment), due mainly to rising external demand.
Tomáš Holub, Executive Director, Monetary and Statistics Department