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* Czech GDP +0.8 pct q/q, +2.2 pct y/y
* Romania +0.3 pct q/q, falls 0.5 pct y/y
* Hungary flat on quarter, up 1 pct y/y
* Slovak GDP +1.2 pct q/q, +4.6 pct y/y
* Bulgarian Q2 GDP down 1.5 pct y/y vs 3.6 pct in Q1
By Michael Winfrey
PRAGUE, Aug 13 (Reuters) - Countries in the EU's eastern
wing grew faster than expected in the second quarter, clawing
further out of deep contractions last year and raising the
prospect of slightly higher full year growth.
Flash estimates from Hungary, Romania, Slovakia, the Czech
Republic and Bulgaria on Friday contained few details but
tracked a surprising growth surge in Germany, the region's
biggest export market and the main driver of the industry-based
rebound.
Euro zone member Slovakia led the pack, with 1.2 percent
growth from the previous three months and a 4.6 percent
expansion from a year ago []. The Czechs grew 0.8
percent and 2.2 percent, a touch above forecast [].
Hungarian gross domestic product was flat on the quarter but
up 1 percent on the year [], and Romania emerged,
likely only briefly, from a recession that has dogged it since
the start of last year.
Analysts said the data, fuelled by bourgeoning demand in
China and other Asian economies for European goods, could prompt
policymakers to tweak their full year growth forecasts higher.
But they added the countries, particularly Romania and
Hungary, would face headwinds in the second half, while
persistently weak domestic demand meant the recovery was still
dependent on more developed western states.
"Overall it has surprised us on the upside. We suspect
basically this is largely due to exports to the euro area, and
then as re-exports to Asia. We think that is what is driving
this," said Peter Attard Montalto, an analyst at Nomura.
"We see some kind of dip back, particularly in the Hungarian
and Romanian numbers, in the second half of the year as we get
the fuller impact of what's going on in each country."
Bulgaria's economic decline slowed to 1.5 percent on an
annual basis, compared with a 3.6 percent drop from January to
March. Most analysts see the country showing around zero growth
this year after a 5 percent drop in 2009. []
The region's currencies were little changed after the data.
The Romanian leu <EURRON=> was flat, and the Czech crown
<EURCZK=> edged lower to 24.755 per euro. Czech bonds rallied on
the long-end, with the 9-year yield <CZ1002471=> a touch lower
after hitting a lifetime low this week.
Stock markets rose slightly, with up to 1 percent gains in
Budapest <> and Bucharest <> by 0856 GMT.
HEADWINDS
Second quarter growth in Germany, which takes anywhere from
a fifth to a third of Czech, Slovak and Hungarian exports, hit
2.2 percent, its highest level since reunification
[]. French and Austrian figures also bettered
expectations.
But there are many factors keeping economists on guard. A
Thomson Reuters survey this week of foreign direct investors in
emerging Europe showed recovery momentum was losing steam for
the straight third quarter.
After contractions last year ranging from 4 percent in the
Czech Republic to 7.1 percent in Romania, unemployment is at or
near double-digits in most of the region, forcing consumers to
keep spending down and firms to hold back from investing.
Other factors include a flagging U.S. recovery that could
weaken demand for the components produced in the ex-communist
region, and looming budget cuts from governments struggling to
bring down high budget deficits and public debt.
On Tuesday, the Czech central bank's chief statistician
Tomas Holub said the Czech government's plans to cut the fiscal
deficit next year to 4.6 percent of GDP, from 5.3 percent this
year, was likely to cut growth by several tenths of a percent.
But analysts said the strong second quarter data and
positive figures out of Germany could allow them to push up
their full year growth forecasts slightly to about 2 percent,
compared with 1.6 percent forecast by the central bank.
Romania's government has hiked consumption tax by 5 percent
and cut public wages by 25 percent, moves analysts expect to
lead to a quarter-on-quarter fall in growth from July to
September. []
Hungary's annual 1 percent growth beat market forecasts for
a 0.65 percent rise, but economists said a one-off tax aimed at
siphoning off 200 billion forints from the banking sector would
hit a weak lending environment and squeeze growth.
"The prognosis for growth in 2011 (2.6 percent) remains
cautious, seeing that the effect of the bank tax is still
uncertain," said CIB bank analyst Gyorgy Barta.
(Additional reporting by Reuters Prague, Budapest, Bucharest,
Sofia and Bratislava bureaus; editing by Patrick Graham)
