PRAGUE, Feb 12 (Reuters) - The Czech economy unexpectedly
dropped 0.6 percent over the previous three months in the fourth
quarter, widely missing analysts' forecast for a 0.8 percent
rise, data showed on Friday.
The statistics office did not release a breakdown of its
flash GDP estimate, but said the annual drop was mainly due to a
6.9 percent decrease in taxes on products, especially due to
high comparative basis in the third quarter.
The number was completely out of the range predicted by
analysts in a Reuter poll, where the most pessimistic estimate
was for a 0.4 percent quarterly drop. <CZ/ECON17>
The poor Czech number followed news of a fourth-quarter
stagnation in Germany, the Czechs' key trade partner which was
expected to grow by 0.2 percent.
Czech gross domestic product fell 4.2 percent year-on-year
in real terms in the fourth quarter, and the full-year drop was
4.3 percent.
The market had expected a seasonally-adjusted year-on-year
fall of 2.8 percent, following a third quarter drop of 4.1
percent.
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KEY POINTS:
GROSS DOMESTIC PRODUCT
(pct change) Q4/09 Q3/09 Fcast Q4
quarter/quarter -0.6 (0.8) 0.8
year/year -4.2 (-4.1) -2.8
Details of Q4GDP data...........................[]
- The Czech Statistics Office will release full details on
March 11.
COMMENTARY:
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"(Quarter-on-quarter drop) is a huge surprise not only for
me but for the market. I have to say frankly I can't quite
understand the reason behind this decline..."
"OK, I would understand the gross value added only increased
0.2 percent quarter-to-quarter, and is worse than I would have
expected, but still the deviation is not that big. But why on
earth has the figure changed... to minus 0.6 percent."
"It was explained by a decline in the taxes from products,
which seems to me strange."
"For the moment, I would incline to believe the figure will
be revised upward later... but not to a plus figure."
JAROMIR SINDEL, CHIEF ECONOMIST, CITIBANK, PRAGUE
"It was broadly in line with our expectations, we expected a
0.4 percent contraction. A positive thing was a contribution
from industry when added value was falling more slowly than the
GDP, so it was a positive contribution quarter on quarter."
"Overall, it reflects a drop in the effective domestic
demand and investment probably also recorded some drop."
"The GDP is composed on the supply side from an added value
which includes industry, services, construction... and a tax on
products which are products at which it is impossible to
allocate the taxes among the sectors. It is a special category
of taxes which is often quite volatile, they are indirect taxes
on products."
PIOTR MATYS, ANALYST, 4CAST
"This is undoubtedly very disappointing data sending a
warning signal that the Czech recovery could be very bumpy and
was we mentioned on many previous occasions may prove
unsustainable."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Strong surprise, negative surprise... It is maybe due to
the end of car scrapping (subsidies) in Germany, especially due
to low domestic demand."
"This is something that could lead some people to think
about another possible rate cut -- I don't believe it, but it
can be a subject of speculation with negative impact on the
Czech currency."
MARKET REACTION:
The crown currency traded marginally firmer after the data
at 25.980 to the euro <EURCZK=> from 26.001 ahead of the news.
BACKGROUND:
- For story on analysts' expectations before the data release,
double click on []
- Slovak Q4 GDP []
- Hungary's Q4 GDP []
- Poland's FY 2009 GDP []
LINKS:
- For further details on fourth 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 Jan Lopatka)
