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 2.6% year on year in 2010 Q4. In quarter-on-quarter terms, it was up by 0.3%. GDP growth for the whole of 2010 totalled 2.2%.
Compared to the current CNB forecast, the reported growth in economic activity in 2010 Q4 is lower by less than one percentage point in both year-on-year and quarter-on-quarter terms.
The lower annual GDP growth compared to the forecast was due to weaker-than-expected developments in all domestic demand components. Both household and government consumption declined slightly in year-on-year terms, whereas the CNB had expected it to grow. Moreover, household consumption figures for the previous two quarters were revised downwards, moving closer to the observed developments in disposable income and retail sales. In addition, fixed investment declined year on year, falling short of the growth rate expected in the CNB forecast. The decline is surprising also in the context of the sizeable investment in the construction of photovoltaic power stations towards the end of 2010. The annual rise in inventories also came in slightly lower than the CNB had expected. By contrast, the growth rates of exports of goods and services were slightly above the CNB forecast, with total imports growing substantially less than expected. Contrary to the expected annual decline, net exports stagnated, partly offsetting the effect of the weaker evolution of domestic demand on GDP growth.
Overall, the CNB’s expectations that annual GDP growth would temporarily continue to pick up pace were not confirmed in Q4, with output growth stagnating approximately at the level of Q3. The current CNB forecast expects the economy to grow by 1.6% this year, down from 2.2% in 2010. This decline will be attributable to fiscal restriction, lower investment in the construction of photovoltaic power stations and restocking, as well as slowing growth in external economic activity. As external demand growth picks up pace and the effects of this year’s fiscal consolidation unwind, 2012 will see a noticeable acceleration in Czech GDP growth to 3%.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the GDP figures for 2010 Q4
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 2.6% year on year in 2010 Q4. In quarter-on-quarter terms, it was up by 0.3%. GDP growth for the whole of 2010 totalled 2.2%.
Compared to the current CNB forecast, the reported growth in economic activity in 2010 Q4 is lower by less than one percentage point in both year-on-year and quarter-on-quarter terms.
The lower annual GDP growth compared to the forecast was due to weaker-than-expected developments in all domestic demand components. Both household and government consumption declined slightly in year-on-year terms, whereas the CNB had expected it to grow. Moreover, household consumption figures for the previous two quarters were revised downwards, moving closer to the observed developments in disposable income and retail sales. In addition, fixed investment declined year on year, falling short of the growth rate expected in the CNB forecast. The decline is surprising also in the context of the sizeable investment in the construction of photovoltaic power stations towards the end of 2010. The annual rise in inventories also came in slightly lower than the CNB had expected. By contrast, the growth rates of exports of goods and services were slightly above the CNB forecast, with total imports growing substantially less than expected. Contrary to the expected annual decline, net exports stagnated, partly offsetting the effect of the weaker evolution of domestic demand on GDP growth.
Overall, the CNB’s expectations that annual GDP growth would temporarily continue to pick up pace were not confirmed in Q4, with output growth stagnating approximately at the level of Q3. The current CNB forecast expects the economy to grow by 1.6% this year, down from 2.2% in 2010. This decline will be attributable to fiscal restriction, lower investment in the construction of photovoltaic power stations and restocking, as well as slowing growth in external economic activity. As external demand growth picks up pace and the effects of this year’s fiscal consolidation unwind, 2012 will see a noticeable acceleration in Czech GDP growth to 3%.
Tomáš Holub, Executive Director, Monetary and Statistics Department