UPDATE 1-Czech output plunges at record pace, rate cuts seen

                                
 (Adds analyst quotes, updates prices)
                                
 PRAGUE, Jan 14 (Reuters) - Czech industrial output plunged
in November, giving more signs of the heavy impact fading euro
zone demand is having on the export-reliant economy and adding
weight to calls for swift and bold interest rate cuts.
                                
 Central Europe's economies have come under heavy pressure in
the global economic slide, with Czech Republic and Poland most
likely to show modest 2009 growth and Hungary a contraction.
                                
 Czech industrial output dropped 17.4 percent in November,
the largest annual drop since 2001 under current methodology and
and since 1993 using an older time series.
                                
 That was much worse than forecasts of an 8.9 percent drop as
analysts said the struggling car sector weighed.
                                
 The Czech crown <EURCZK=> fell 1.3 percent after the data to
trade at 26.89 to the euro by 1007 GMT, close to the 27 level
last seen in November 2007.
                                
 "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," said Radomir Jac, chief
economist for Generali PPF Asset Management.
                                
 "...The message for the central bank is clear: interest
rates must go down further and quite radically."
                                
 The Czech central bank (CNB) has cut its main interest rate
by 150 basis points since August to 2.25 percent, and most
analysts expect another 50 basis point cut at the next meeting
on Feb. 5 as inflation falls off sharply in 2009. Czech interest
rates reached a historic low of 1.75 percent in 2005.
                                
 "We now expect a cut of at least 75 basis points at the next
CNB board meeting in February," said Lars Christensen, senior
analyst at Danske Bank. 
                                
 The Czech economy is highly dependent on exports, like
regional peers, and has suffered from weak demand in the
recession-stricken euro zone. New foreign orders fell 33.8
percent in November.
                                
 Central bank Vice-Governor Miroslav Singer said on Wednesday
2009 growth was likely to correspond to an alternative central
bank outlook of 0.5 percent growth. [ID:nPRG001193]
                                
 "We worked out the alternative with the knowledge that we do
not know how deeply a drop in demand shows on our export markets
... And now it looks that the alternative is being fulfilled,"
Singer told Reuters on the sidelines of an economic conference
before the data release.
                                
 Growth in 2008 is expected to slip to about 4.5 percent from
expansion of around 6 percent in the three preceding years.
                                
 Czech growth forecasts have been slashed since the
escalating global financial crisis first crashed into central
Europe in October last year. A growing number of analysts
predict the Czech economy to follow Hungary into recession.
                                
 The key automobile industry has been hardest hit, with the
country's largest exporter, Volkswagen's <VOWG.DE> Skoda Auto,
scaling back production at the end of 2008 and moving to
four-day work weeks to start 2009. 
 (Reporting by Jason Hovet, editing by Mike Peacock/Victoria
Main)