Czech Republic: Q4 GDP growth revised upward
March 6, 2014
In the fourth quarter, GDP increased a seasonally- and calendar-adjusted 1.3% over the same quarter of the previous year, according to revised data. The reading marked a significant upward revision to the 0.8% increase published in the advance estimate and contrasted the revised 1.0% contraction registered in the third quarter (previously reported: -1.2% year-on-year). Q4's result reflected an improvement in both domestic demand and in the external sector. On the domestic side of the economy, total consumption expanded 0.8% in Q4 (Q3: +0.3% year-on-year) on the back of faster growth in private consumption (Q4: +0.7% yoy; Q3: +0.3% yoy) and healthy growth in public spending (Q4: +2.1% yoy; Q3: +2.6% yoy). Gross fixed investment bounced back from a 4.7% contraction in Q3 to a 2.7% expansion in Q4. Regarding external demand, growth in exports of goods and services accelerated from a 0.4% increase in Q3 to a 3.5% expansion in Q4. Imports expanded 3.2% in the fourth quarter, which was stronger than the 2.8% rise observed in Q3. The external sector's net contribution to overall economic growth improved from a 1.8 percentage-point detraction in Q3 to a 0.6 percentage-point contribution in Q4. On a quarter-on-quarter basis, GDP jumped 1.9% in seasonally-adjusted terms in Q4 (previously reported: +1.6 qoq), which marked the fastest pace of expansion since Q1 2007. The reading came in above the 0.3% increase observed in Q3. The contraction in the Czech economy was less severe than had been estimated previously. In the full year 2013, GDP decreased 0.9% (previously reported: -1.1%), which matched the contraction registered in 2012. The Czech National Bank expects the economy to expand 2.2% in 2014. For 2015, the Bank sees economic growth picking up to 2.8%. FocusEconomics Consensus Forecast panelists expect the economy to expand 1.8% in 2014, which is up 0.1 percentage points over the previous month's projection. For 2015, the panel sees the economy increasing 2.4%.
Author: Ricardo Aceves, Senior Economist