PRAGUE, Dec 9 (Reuters) - The Czech economy expanded by 1.0
percent in the third quarter from the previous three-month
period, just below a preliminary estimate of 1.1 percent, the
statistics bureau said on Thursday.
On annual basis, the economy rose by a real 2.8 percent
between July and September, a touch below a preliminary estimate
of 3.0 percent released on Nov. 12.
In other data, consumer prices rose 0.2 percent in November
from October, putting the annual inflation rate at 2.0 percent.
The annual GDP growth was driven by an increase in
manufacturing, market services and trade, the stats office said.
The Czech year-on-year growth was worse than the growth in
neighbouring Slovakia, which posted a 3.8 percent year-on-year
rise in July-September and Poland's 4.2 percent year-on-year
growth. It was better than 1.7 percent growth in Hungary.
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KEY POINTS (See details below comments):
CZECH Q3 GDP (pct) Q/Q YR/YR
Real change 1.0 (1.1) 2.8 (3.0)
CONSUMER INFLATION Nov Oct Nov forecast
pct change month/month 0.2 -0.2 0.1
pct change year/year 2.0 2.0 1.9
COMMENTS:
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"Overall, headline CPI remains slightly below forecast of
the Czech national Bank and demand-side inflationary pressures
remain muted in Czech economy, so majority of the central bank
board will likely be assured in its opinion that there should
not be a hurry with monetary policy tightening in several months
to come.
"Still, we expect interest rate hike to become a hot topic
for the Czech National Bank in second quarter of the next year."
"Although today's data show slightly weaker GDP growth for
the third quarter than what was indicated by preliminary
estimate in mid-November, the growth is still strong."
"Nice growth is reported from household consumption and also
from gross fixed capital creation in year-on-year terms
(although in this case the solar energy boom works as a
temporary factor in second half of this year)."
"All in all, taking into account the slight revisions of
historical data, Czech GDP growth is likely to reach 2.2 or 2.3
percent this year and we keep our call for growth at a 2.0
percent area in 2011."
HELENA HORSKA, ECONOMIC RESEARCH, RAIFFEISENBANK
"The composition of the GDP growth contributors corresponds
to an early stage of an economic recovery which is usually
driven by inventories."
"We consider the 2.8 percent growth solid and increase our
estimate for the full year growth to 2.2 percent."
"The main driver will be the manufacturing industry. From
the expenditures point of view, it will be renewing inventories
and exports."
MIROSLAV FRAYER, ANALYST, KOMERCNI BANKA
The growth of Czech consumer prices held on at the level of
the central bank's inflation target for the third month in a
row... The structure more or less developed in line with our
prognosis, while the growth dynamic in food prices was actually
a bit higher than we forecast. It was, however, compensated for
by a lower dynamic in adjusted inflation."
"Inflation should move around the central bank's inflation
target next year as well. Weak consumer demand, for now, is
preventing a significant aceleration in price growth. Among the
factors that could push inflation higher in the coming months
are food prices, while a source of uncertainty will be tax
changes and changes in regulated prices."
"On the other hand, the prices of fuels, which have risen in
past months, should not grow significantly. Adjusted inflation,
which is most influenced by consumer demand, should rise into
black figures in the next year but will be moderate."
PETR DUFEK, ANALYST, CSOB
"Inflation stayed at the central bank's target for another
month and shows that there is no reason for the central bank to
react for now."
"GDP is weaker than the originally announced number. What is
interesting is the rise in household consumption and in
investment."
"Households were probably driven by an improvement in the
situation on the labour market, but that is over now.
Investments were driven by the solar power boom, which will not
last very long either."
"The GDP result, therefore, is not so good, also because
inventories remain key. We don't have to be afraid of demand-led
inflation despite the short-term spike in consumption."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Inflation surprised. It was moderately higher due to food
prices, which reacted to the growth in agricultural prices."
"Inflation at 2 percent is exactly on the central bank
target, so there is no reason to worry that there could be a
hasty rise in interest rates."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT PRAGUE:
"The drop versus the flash estimate was small and
corresponds to our expectations after yesterday's (quarterly)
current account data. The only reason of the revision was
probably the change in the balance of services and nothing more
significant happened."
"The structure of growth did not change much from the
pervious period. Domestic demand (was solid). There is a decline
in the contribution of foreign trade to GDP growth or the
contribution could possibly be negative."
CENTRAL BANK FORECAST: The central bank had forecast
third-quarter GDP growth of 2.7 percent in its most recent
projection in November. In its quarterly forecast, it also saw
November annual inflation at 2.1 percent, while analysts in a
Reuters poll saw it at 1.9 percent.
The bank cut interest rates to a record low of 0.75 percent
on May 6.
Details of Q3 GDP data..........................[]
Details of November inflation data..............[]
DETAILS:
GROSS DOMESTC PRODUCT:
- On the supply side in the year-on-year comparison, gross added
value grew by 3.7 percent mainly thanks to a 10.7 percent rise
in manufacturing, a 7.0 percent rise in market services and a
5.3 percent rise in trade.
- Manufacturing was driven by the automotive industry, machinery
and production of electrical and optical devices.
- In the quarter-on-quarter comparison, gross added value rose
by 1.5 percent, including a 6.6 percent rise in trade and a 4.5
percent rise in manufacturing.
- On the supply side, capital formation and a rise in
inventories were key.
- Final consumption expenditures rose by 0.7 percent year on
year and contributed to GDP growth by 0.5 percentage points.
- Gross capital formation rose by 14.4 percent and contributed
3.1 percentage points to GDP growth.
- The foreign trade balance fell by 22.9 billion crowns from the
same period last year due to worsening in terms of trade.
INFLATION:
- Monthly consumer price growth was mainly due to a rise in food
prices and the prices of non-alcoholic beverages.
- Prices of vegetables rose by and a 4.8 percent and prices of
fruits were up 4.8 percent.
BACKGROUND:
- Market expectations before release []
- Slovak Q3 GDP..................................[]
- Poland's Q3 GDP................................[]
- Hungary's Q3 GDP...............................[]
- Report on last Czech c.bank rate decision......[]
[] [] []
LINKS:
- For further details on third quarter GDP and May other past
inflation 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; editing by Michael Winfrey)
