Economic growth slows and is lower than forecasted by CNB
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 5.3% year on year and by 0.9% quarter on quarter in 2008 Q1. The annual rate of growth is slightly (0.1 percentage point) lower than the preliminary CZSO estimate dating from 15 May this year. The CZSO performed its regular revision of the annual national accounts for 2005 and 2006 and adjusted the corresponding quarterly indicators of year-on-year GDP growth in 2005–2007. The full-year growth was revised downwards by 0.1 percentage point for 2005 and upwards by 0.4 and 0.1 percentage point for 2006 and 2007 respectively.
The growth of the Czech economy thus slowed compared to the previous three years. The main reason for the decreased GDP growth was a marked slowdown in consumer demand, caused mainly by a rise in inflation.
The published seasonally unadjusted year-on-year GDP growth for 2008 Q1 (5.2%) is 1.1 percentage points lower than predicted by the CNB’s current forecast, partly due to the revisions, which, unlike the original data, suggest that the growth started to slow in quarter-on-quarter terms as early as last year. The outturn in 2008 Q1 was 0.4 percentage point lower than the CNB’s forecast in quarter-on-quarter terms.
Deviations from the CNB’s forecast were recorded in the structure of the economic growth. The slowdown in real household consumption growth was more pronounced than expected by the CNB due to higher inflation, despite higher-than-expected nominal wage growth in 2008 Q1. At the same time, there was no increase in fixed capital investment. On the contrary, gross fixed capital formation showed a decline compared to the previous quarter. The rate of growth of government consumption was in line with the prediction. Year-on-year growth in exports and imports of goods and services, by contrast, was higher than forecasted by the CNB, as were net exports. The dampening effects of the stronger-than-expected exchange rate of the koruna can be expected to feed through to the foreign trade figures with a longer lag.
According to the CZSO, the 5.4% year-on-year growth in gross value added at constant prices in 2008 Q1 was due mainly to manufacturing (year-on-year growth of 13.6%). More pronounced growth in gross added value in real terms was also recorded in transport, trade and business services, whereas a year-on-year decline was observed in construction and agriculture.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2008 Q1
Economic growth slows and is lower than forecasted by CNB
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects rose by 5.3% year on year and by 0.9% quarter on quarter in 2008 Q1. The annual rate of growth is slightly (0.1 percentage point) lower than the preliminary CZSO estimate dating from 15 May this year. The CZSO performed its regular revision of the annual national accounts for 2005 and 2006 and adjusted the corresponding quarterly indicators of year-on-year GDP growth in 2005–2007. The full-year growth was revised downwards by 0.1 percentage point for 2005 and upwards by 0.4 and 0.1 percentage point for 2006 and 2007 respectively.
The growth of the Czech economy thus slowed compared to the previous three years. The main reason for the decreased GDP growth was a marked slowdown in consumer demand, caused mainly by a rise in inflation.
The published seasonally unadjusted year-on-year GDP growth for 2008 Q1 (5.2%) is 1.1 percentage points lower than predicted by the CNB’s current forecast, partly due to the revisions, which, unlike the original data, suggest that the growth started to slow in quarter-on-quarter terms as early as last year. The outturn in 2008 Q1 was 0.4 percentage point lower than the CNB’s forecast in quarter-on-quarter terms.
Deviations from the CNB’s forecast were recorded in the structure of the economic growth. The slowdown in real household consumption growth was more pronounced than expected by the CNB due to higher inflation, despite higher-than-expected nominal wage growth in 2008 Q1. At the same time, there was no increase in fixed capital investment. On the contrary, gross fixed capital formation showed a decline compared to the previous quarter. The rate of growth of government consumption was in line with the prediction. Year-on-year growth in exports and imports of goods and services, by contrast, was higher than forecasted by the CNB, as were net exports. The dampening effects of the stronger-than-expected exchange rate of the koruna can be expected to feed through to the foreign trade figures with a longer lag.
According to the CZSO, the 5.4% year-on-year growth in gross value added at constant prices in 2008 Q1 was due mainly to manufacturing (year-on-year growth of 13.6%). More pronounced growth in gross added value in real terms was also recorded in transport, trade and business services, whereas a year-on-year decline was observed in construction and agriculture.
Tomáš Holub, Executive Director, Monetary and Statistics Department