Economic activity was above CNB forecast in 2013 Q2
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 1.3% year on year in 2013 Q2. In quarter-on-quarter terms, by contrast, it increased by 0.6%. Compared to the current CNB forecast, the reported change in economic activity in 2013 Q2 is about 0.4 percentage point higher in both year-on-year and quarter-on-quarter terms.
The upward deviation of GDP from the CNB forecast was related to a larger-than-expected year-on-year increase in net exports associated with an earlier-than-forecasted recovery in foreign trade turnover. Government consumption also recorded slightly faster growth in 2013 Q2 than forecasted by the CNB. By contrast, gross capital formation fell rather more significantly than expected, mainly because of a deeper year-on-year decrease in fixed investment. The weak year-on-year growth in household consumption was broadly in line with the CNB’s expectations.
The new data pose a risk to the CNB’s current forecast probably towards somewhat higher-than-expected economic activity this year. However, GDP and its components, as well as gross value added, showed high quarter-on-quarter volatility throughout 2013 H1. Overall, we can still say that the Czech economy is close to the bottom of its cycle and is anti-inflationary in its effect. According to the current CNB forecast, generally weak domestic demand, affected by ongoing fiscal consolidation and only slowly recovering external demand, will lead to a decline in GDP of 1.5% this year. In 2014, the economy will grow by around 2% thanks to the unwinding of the effect of fiscal consolidation and a recovery in external demand.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2013 Q2
Economic activity was above CNB forecast in 2013 Q2
According to the CZSO’s estimate released today, GDP adjusted for price, seasonal and calendar effects declined by 1.3% year on year in 2013 Q2. In quarter-on-quarter terms, by contrast, it increased by 0.6%. Compared to the current CNB forecast, the reported change in economic activity in 2013 Q2 is about 0.4 percentage point higher in both year-on-year and quarter-on-quarter terms.
The upward deviation of GDP from the CNB forecast was related to a larger-than-expected year-on-year increase in net exports associated with an earlier-than-forecasted recovery in foreign trade turnover. Government consumption also recorded slightly faster growth in 2013 Q2 than forecasted by the CNB. By contrast, gross capital formation fell rather more significantly than expected, mainly because of a deeper year-on-year decrease in fixed investment. The weak year-on-year growth in household consumption was broadly in line with the CNB’s expectations.
The new data pose a risk to the CNB’s current forecast probably towards somewhat higher-than-expected economic activity this year. However, GDP and its components, as well as gross value added, showed high quarter-on-quarter volatility throughout 2013 H1. Overall, we can still say that the Czech economy is close to the bottom of its cycle and is anti-inflationary in its effect. According to the current CNB forecast, generally weak domestic demand, affected by ongoing fiscal consolidation and only slowly recovering external demand, will lead to a decline in GDP of 1.5% this year. In 2014, the economy will grow by around 2% thanks to the unwinding of the effect of fiscal consolidation and a recovery in external demand.
Tomáš Holub, Executive Director, Monetary and Statistics Department