PRAGUE, Feb 15 (Reuters) - The Czech economy grew by 0.5
percent over the previous three months in the fourth quarter,
below analysts' forecast for a 0.8 percent rise, data showed on
Tuesday.
On a year on year basis GDP grew by 2.9 percent in real
terms in the fourth quarter, the Czech stats office said, below
estimates.
The economy continued to be driven by foreign demand for
manufactured goods but an extended downturn in the construction
sector, bad weather affecting agriculture and cuts in government
spending held back expansion.
The office said the 2010 full-year GDP grew by 2.3 percent
on the year, a reversal from a contraction of 4.0 percent in
2009.
Data also showed industrial producer prices rose 1.4 percent
month-on-month in January and 4.6 percent year-on-year, both
figures above forecast.
Analysts had expected a 1.0 percent month-on-month increase
in industrial PPI and a 4.2 percent year-on-year growth
<CZ/ECON04> <CZ/ECON15> <ECONCZ>.
In December, producer prices rose 1.0 percent month-on-month
and 3.6 percent year-on-year.
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KEY POINTS:
GROSS DOMESTIC PRODUCT
(pct change) Q4/10 Q3/10 Fcast Q4
quarter/quarter 0.5 1.0 0.8
year/year 2.9 2.8 3.2
PPI
(change in percent) Jan Dec Jan forecast
month/month 1.4 1.0 1.0
year/year 4.6 3.6 4.2
Details of Q4 GDP data.........................[]
Details of January PPI.........................[]
MARKET REACTION:
The Czech crown <EURCZK=> was little changed by the data,
trading at 24.325 to the euro compared to 24.33 seen at the data
release.
COMMENTARY:
VOJTECH BENDA, CHIEF ECONOMIST, ING COMMERCIAL BANKING
"The quarterly dynamics eased moderately... though the
growth remained strong, and corresponds to monthly data. The
main contribution comes from engineering and export-oriented
industry."
"A relatively strong PMI shows that industrial output kept a
relatively strong pace also in January so for now it does not
look like the economy should slow significantly."
"The number is weaker than the consensus which can
moderately weaken the crown because markets may delay pricing in
expectations for interest rate hikes."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"While the fourth quarter GDP flash estimate came in below
the central bank's forecast and as such can be seen as an
argument against tightening of monetary policy in the near-term,
I think that the central bank actually will not make any strong
conclusion from the flash estimate.... We have to wait until 11
March for the detailed information and possibly also for
slightly revised headline GDP number.
"For this year we keep our call for Czech GDP growth at
circa 2.0 percent: a slight slowdown from a 2.3 percent growth
seen in 2010 will be caused by somewhat weaker export growth (as
GDP growth in Eurozone will slightly decelerate due to fiscal
austerity measures) while domestic investment in Czech economy
will feel negative impact of end of the solar boom - but this
(i.e. slowdown in investment-related imports) will at the same
time lead to improvement in Czech net exports and of their
contribution to overall GDP growth compared to 2010."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"GDP is a mild disappointment, similar to the data published
in France and Germany. However, it is only mildly disappointing
and does not change the positive picture for the Czech economy."
"We do not have detailed data, but the growth was driven
mainly by foreign trade. On the other hand domestic demand
should be a brake, driven lower mainly by government cuts to
reduce the budget deficit."
"The figures from last year do not change the outlook for
this year, when we expect a slight acceleration of growth to 2.6
percent from 2.3 percent last year."
MARTIN LOBOTKA, ANALYST, CESKA SPORITLENA
"The GDP number was a little below our expectations which
could partly be due to a revision of the previous data (which we
cannot see now). It is likely that there was some drop in
government expenditures.
"I do not expect any reaction on the crown or interest
rates."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT BANK, PRAGUE
"It is between the consensus and our own forecast. It has
confirmed the economy has slowed its expansion but this is
nothing dramatic and is a natural development after several
quarters of very fast acceleration in the economy."
"It also shows solar power investments probably did not
create such a value-added amount as hoped because, simply, that
kind of investment is very import-demanding and value-added is
relatively low there."
"The severe weather conditions in December may have also
contributed to a slowdown. This probably means the slowdown
widely expected in the beginning of this year may not
materialise or may be relatively mild."
GROSS DOMESTIC PRODUCT
- The statistics office did not release a breakdown of its flash
GDP estimate, but said the rise was mainly due to a higher
performance of industrial sectors, namely car production,
engineering and production of electrical machines.
- Construction and agriculture saw a drop in gross added value,
the office said.
- The bureau will release full details on March 11.
PRODUCER PRICES
- In the month on month comparison, producer prices were driven
by prices of electricity, gas, steam and air conditioning.
- Year on year, industrial PPI grew on the back of higher coke
and refining product prices.
- Agricultural producer prices rose by 3.6 percent on the month,
and showed its sixth annual growth in a row with 23.0 percent.
- Construction work prices rose by 0.1 percent on a
month-on-month basis and dipped 0.4 percent year-on-year.
- Prices in the service sector dropped by 1.0 percent on the
month and rose by 0.1 percent year-on-year.
BACKGROUND:
- For story on analysts' expectations before the data release,
double click on []
- Slovakia's Q4 GDP []
- Hungary's Q3 GDP []
- Romania's Q3 GDP []
- Poland's FY 2010 GDP []
- January consumer inflation []
[] []
- December industrial output figures []
- Report on last Czech c.bank rate decision......[]
[] [] [] []
[]
LINKS:
- For further details on fourth quarter GDP, January producer
prices 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-hdp
- 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 Jana Mlcochova)
