Czech Republic: Economy contracts in Q4
March 11, 2013
In the fourth quarter, GDP contracted a seasonally and calendar-adjusted 1.7% over the same period the previous year, according to revised data published by the Czech Statistics Office. The figure matched the initial decline reported in the flash estimate and followed the 1.5% drop observed in the third quarter. In 2012, the economy contracted 1.2%, which contrasted the 1.9% expansion see in 2011. Full year growth.
The fourth quarter deterioration showed that total consumption slumped, amid a worsening in private consumption (Q3 2012: -3.9% year-on-year; Q4: -4.1% yoy), whereas government consumption swung from a 0.4% drop in Q3 to a 0.8% increase in Q4. Gross fixed investment plummeted 5.0% in the fourth quarter, exceeding the 3.0% contraction tallied in the third.
On the external front, exports of goods and services increased only 1.4% in Q4, slower than the 4.3% expansion observed in Q3. On the other hand, growth in imports picked up from 0.3% in Q3 to 1.2% in Q4. As a result, the external sector's net contribution to overall growth fell from 3.3 percentage points in the third quarter to 0.3 percentage points in the fourth.
A quarter-on-quarter comparison, however, does not confirm the deterioration seen in the annual figures, as GDP dropped a seasonally adjusted 0.2% in Q4, which was above the 0.4% decline recorded in Q3.
The government expects the economy to grow only 0.1% this year. Meanwhile, the Czech National Bank expects economic activity to contract 0.3% this year and to rebound in 2014, expanding 2.1%. FocusEconomics Consensus Forecast panellists are more optimistic and expect the economy to increase 0.2% this year, which is down 0.1 percentage points over the previous month's projection. For 2014, the panel sees economic growth accelerating to 1.9%.
Author: Ricardo Aceves, Senior Economist