PRAGUE, May 12 (Reuters) - The Czech economy grew less than
expected in the first three months of the year, data showed on
Wednesday, expanding by 0.2 percent on what analysts said was a
rise in industry but weak domestic demand.
The result undershot analysts' forecast of a 0.4 percent
rise. Gross domestic product expanded 1.2 percent year-on-year
in real terms in the first quarter.
The market had expected seasonally-adjusted year-on-year
growth of 1.4 percent, following a fourth quarter drop of 3.1
percent.
Analysts said growth appeared mainly driven by exports to
the main Czech market Germany, although they said the
quarter-on-quarter figure was unexpectedly low and could be
revised once final data is released on June 9.
Demand for goods manufactured in central and Eastern Europe
rose in the first quarter, as illustrated by a 25 percent jump
in sales from the biggest Czech company, Volkswagen <VWOG.DE>
from January to March.
The statistics office did not release a breakdown of its
flash GDP estimate, but said the annual and quarterly rise was
mainly due to stronger manufacturing in the period, while
construction was a negative factor.
The Czech crown firmed with regional peers after the data to
25.38 to the euro <EURCZK=>, from 25.485 before the release.
****************************************************************
KEY POINTS:
GROSS DOMESTIC PRODUCT
(pct change) Q1/10 Q4/09 Fcast Q1
quarter/quarter 0.2 0.7 0.4
year/year 1.2 -3.1 1.4
****************************************************************
Details of Q1 GDP data..........................[]
COMMENTARY
HELENA HORSKA, ANALYST, RAIFFEISENBANK
"The Czech economy grew in the first quarter a little slower
than the market expected, although 1.2 percent year-on-year
growth cannot be taken as a disappointment. What is important is
we are getting out of recession. Export-oriented manufacturing
is pulling the rebound, while construction stays in recession."
"For this year we maintain our forecast around 1 percent
growth."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"The result is pretty close to the market expectation but
seems to be weaker than what the Czech central bank was
expecting in its recently released quarterly forecast."
"However, the GDP result is preliminary and does not provide
any details on structure of expenditure. Furthermore, even the
statistical office warns that certain data (especially from the
Finance Ministry) were available only in a very limited scope."
"We all remember the difference between the flash estimate
of GDP for last quarter of 2009 and its final reading was quite
drastic."
"Therefore, I think that the market (and also the central
bank) will not make any strong conclusion from today's release:
yes, it came well in line with the market expectation but final
data, due on June 9, may draw a bit different picture compared
to today's flash estimate, which is based on incomplete
information."
"Still, the message should be that Czech GDP growth has been
driven mainly by net exports and changes in inventories."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"The data may bring a little disappointment, especially in
comparison with the Slovak numbers, which were markedly better.
"Nevertheless the pace of growth is the same in the Czech
Republic as in Germany, so in this regard the development of the
Czech economy corresponds with the development of its main trade
partner."
"There might be a room for an upward revision once the
detailed data are released. However, we keep our forecast of the
Czech economy expanding by 2.0-2.5 percent this year. With no
details available yet we can assume that the main driver of
growth was foreign demand and restocking of inventories."
"On the other hand the household consumption might need few
more months to recover to the pre-crisis level."
VOJTECH BENDA, SENIOR ECONOMIST, ING COMMERCIAL BANKING
"The preliminary GDP estimate is significantly below what
the monthly data from industry and foreign trade were
suggesting."
"Statisticians, however, confirmed their flash estimate is
based on only a limited data source. Hence we could expect large
revision next month, similar to the upward revision of Q4,
2009."
"The outlook on the second quarter has improved a bit with
the stabilization of the labour market and reversion in
improving consumer and business sentiment. Hence we will
probably see an acceleration of GDP growth."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"It is slightly below forecast, which basically means the
Czech economy has not resumed keeping up with the rest of the
euro zone. On a year-to-year basis, Czech growth is weaker than
in Germany."
"This was to be expected after figures from services, which
suggested it was only industrial output driving the economy
upward."
"Industry will have a good second quarter but what will
follow is still an open issue -- growth may continue or slow.
Other sectors will follow suit but with some delay. Likely, the
second quarter will be better in terms of overall GDP than the
first quarter."
BACKGROUND:
- For story on analysts' expectations before the data release,
double click on []
- Hungary's Q1 GDP []
- Poland's FY 2009 GDP []
LINKS:
- For further details on first quarter GDP 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 Jason Hovet; editing by Michael Winfrey)
