Economic activity was broadly in line with the CNB forecast at the end of last year
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects dropped by 3.1% year-on-year terms in 2009 Q4, while recording a slight increase of 0.7% in quarter-on-quarter terms. The reported year-on-year decline in GDP is 0.4 percentage point deeper than the CNB forecast. However, the quarter-on-quarter increase is broadly in line with the forecast. This apparent discrepancy is due to revisions to the previous data made by the CZSO.
As regards the structure of economic activity, the year-on-year fall in real household consumption at the close of last year was rather surprising given that the CNB had been expecting slowing, but still positive, year-on-year growth. According to the CNB forecast, household consumption should not have started falling year on year until 2010. However, the CZSO made a methodological change in the area of household consumption which may partly explain this deviation of the outturn from the forecast. By contrast, the high growth in government consumption somewhat exceeded the CNB’s expectations. Gross capital formation continued falling dramatically, in line with the CNB forecast, owing to shrinking fixed investment and particularly inventories. Exports of goods and services increased year on year for the first time in a long time, thus achieving a somewhat better result than expected. Similarly, imports of goods and services recorded a smaller year-on-year decline than expected by the CNB. As a result, net exports recorded a more modest year-on-year improvement in comparison with the CNB forecast.
Despite these small deviations, the developments observed at the end of 2009 were broadly in line with the forecast contained in Inflation Report I/2010. This forecast had predicted that economic activity would rebound in the second half of last year. As a result, the year-on-year contraction of the Czech economy will be replaced by modest year-on-year growth in the first quarter of this year. This growth, however, will slow again in as the year progresses owing to subdued household consumption, a renewed slowdown in euro area growth and the unwinding of the pro-growth effect of some anti-crisis measures in the Czech Republic and abroad. A stronger recovery in external demand in 2011 will lead to a more sizeable and more sustainable rise in growth in domestic economic activity next year.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2009 Q4
Economic activity was broadly in line with the CNB forecast at the end of last year
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects dropped by 3.1% year-on-year terms in 2009 Q4, while recording a slight increase of 0.7% in quarter-on-quarter terms. The reported year-on-year decline in GDP is 0.4 percentage point deeper than the CNB forecast. However, the quarter-on-quarter increase is broadly in line with the forecast. This apparent discrepancy is due to revisions to the previous data made by the CZSO.
As regards the structure of economic activity, the year-on-year fall in real household consumption at the close of last year was rather surprising given that the CNB had been expecting slowing, but still positive, year-on-year growth. According to the CNB forecast, household consumption should not have started falling year on year until 2010. However, the CZSO made a methodological change in the area of household consumption which may partly explain this deviation of the outturn from the forecast. By contrast, the high growth in government consumption somewhat exceeded the CNB’s expectations. Gross capital formation continued falling dramatically, in line with the CNB forecast, owing to shrinking fixed investment and particularly inventories. Exports of goods and services increased year on year for the first time in a long time, thus achieving a somewhat better result than expected. Similarly, imports of goods and services recorded a smaller year-on-year decline than expected by the CNB. As a result, net exports recorded a more modest year-on-year improvement in comparison with the CNB forecast.
Despite these small deviations, the developments observed at the end of 2009 were broadly in line with the forecast contained in Inflation Report I/2010. This forecast had predicted that economic activity would rebound in the second half of last year. As a result, the year-on-year contraction of the Czech economy will be replaced by modest year-on-year growth in the first quarter of this year. This growth, however, will slow again in as the year progresses owing to subdued household consumption, a renewed slowdown in euro area growth and the unwinding of the pro-growth effect of some anti-crisis measures in the Czech Republic and abroad. A stronger recovery in external demand in 2011 will lead to a more sizeable and more sustainable rise in growth in domestic economic activity next year.
Tomáš Holub, Executive Director, Monetary and Statistics Department