Czech Republic: GDP up on initial estimates
June 9, 2011
In the first quarter, GDP expanded 2.8% over the same period the year before, according to revised estimates published on 9 June. The revised figure was above the 2.5% expansion initially reported in the 13 May estimate, and was slightly faster than the 2.7% expansion observed in the fourth quarter of 2010. The first quarter improvement mainly reflected an increase in fixed investment and a strong showing by the external sector. Fixed investment bounced back from a 0.1% year-on-year contraction in the fourth quarter to a 3.8% expansion in the first. On the other hand, private consumption contracted 0.5% in the first quarter, contrasting a 0.4% increase in the fourth quarter. Government consumption continued falling (Q1: -1.3% yoy) and marked the third consecutive quarter of contraction, as a result of austerity measures adopted by the government. Meanwhile, both exports and imports continued to grow, albeit at a slower pace. Exports of goods and services grew 15.6% in the first quarter, slower than the 16.8% increase tallied in the fourth quarter, while imports expanded 13.2% in Q1, which marked a sharp deceleration compared to the 17.4% expansion observed in the final quarter of 2010. As a result, the net contribution from the external sector to overall economic growth improved from a 0.1 percentage-point contribution in the fourth quarter to a 2.9 percentage-point contribution in the first. At the sector level, the first quarter reading reflected positive developments in the manufacturing and services sector, in particular in wholesale and retail trade, as well as in financial intermediation. In contrast, agriculture contracted, albeit at a slower pace. A quarter-on-quarter comparison confirms the improvement suggested by annual figures, as GDP grew a seasonally and working day adjusted 0.9% in the first quarter, up from the previous quarter's 0.5% increase. Owing to austerity measures adopted by the government, the Central Bank sees the economy growing a moderate 1.5% this year. For 2012, the Bank expects economic growth to accelerate to 2.8%.
Author: Ricardo Aceves, Senior Economist