PRAGUE, Jan 14 (Reuters) - Czech industrial output plunged
by 17.4 percent year-on-year in November, much more than a 8.9
percent fall predicted by analysts and the worst figure since
records started in January 2001.
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KEY POINTS:
(y/y change in pct) Nov Oct Nov forecast
Industrial output -17.4 -7.6 -8.9
Industrial sales -18.5 -7.9 n/a
(Full table of data............................[])
- Seasonally adjusted output was down 9.2 percent
month-on-month.
- Seasonally adjusted output was down 13.0 percent year-on-year.
- Overall new orders fell 30.2 percent year-on-year, and new
orders from abroad decreased 33.8 percent.
COMMENTARY:
LARS CHRISTENSEN, SENIOR ANALYST, DANSKE BANK, COPENHAGEN
"The Czech economy is in a very serious slowdown and in fact
the Czech economy is the economy in Central and Eastern Europe
that is slowing down the fastest at the moment.
"The Czech automobile industry - which is of huge importance
for the total economy - is suffering seriously from global
crisis in the automobile sector. One example is Skoda which have
close down all problem temporary."
"The automobile industry also has huge importance for the
Slovakia, Polish and Hungarian economies. We therefore also
expect terrible industrial production numbers for Poland due to
be released next week."
"Today's industrial production numbers and the outlook for
inflation to drop to just above 1 percent in January should make
the Czech central bank (CNB) even more dovish. We now expect a
cut of at least 75 basis points at the next CNB board meeting in
February. Furthermore, we would not rule out that CNB could be
the first (maybe with Bank of England) to go to (near) zero
percent interest rates. Therefore, we also recommend buying
EUR/CZK at the present levels."
PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK
"Today's figure do not have a comparison in recent Czech
history and point to the ... impact of the global recession on
the Czech economy.
"But the depth of the industrial output drop also gives hope
that the recession is nearing the bottom."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"Although it was quite obvious that industrial output may
report a double-digit year-on-year decline for November,
following the very weak exports that were reported last week,
the actual figure is quite disastrous."
"I am worried that predictions for Czech economic growth
must be re-written following the data on exports and industrial
output, as Czech GDP is now likely to show year-on-year decline
already in the fourth quarter of 2008."
"Industrial data are negative news for the Czech crown.
However, even if the crown weakens in reaction to the data, the
message for the central bank is clear: interest rates must go
down further and quite radically."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"It is an awful figure. Looking at the structure it is based
on the slump in the car industry..."
"It's mainly from drying external demand from euro zone
countries, especially Germany. Also it can be partly ascribed to
domestic demand that can fade quickly as well."
"It is another reason for strong action, for aggressive
monetary policy, cutting rates by at least 50 basis points at
the beginning of February."
MARKET REACTION:
The Czech crown <EURCZK=> drops to 26.75 to the euro after the
data from 26.55 earlier.
BACKGROUND:
- November foreign trade figures..................[]
- Report on last Czech c.bank rate decision.......[]
[] [] []
LINKS:
- For further details on November output and sales numbers and
past data, Reuters 3000 Xtra users can click on the Czech
Statistical Bureau's Website:
http://www.czso.cz/eng/csu.nsf/kalendar/2004-pru
- For LIVE Czech economic data releases, click on <ECONCZ>
- Instant Views on other Czech data []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
(Reporting by Jason Hovet; Editing by Ruth Pitchford)
