Czech economic growth eases less than expected in second quarter

By bne IntelliNews August 16, 2016

The Czech economy expanded by 2.5% y/y in the second quarter of 2016, easing from 3% in the previous three months, the statistics office said on August 16 in a flash estimate.

Although growth was already expected to slow this year as EU structural fund inflows declined following exceptionally high inflows in 2014/15, second-quarter growth was above market expectations of 2.3%. That suggests the Czech economy is in good shape and the slowdown will be only gradual thanks to strong consumer spending, analysts at Capital Economics said in a note.

On a quarterly basis, GDP growth accelerated to 0.9% in April-June from 0.4% in the previous three months. Analysts were looking for a quarterly rise of 0.6%.

Household consumption and external demand supported growth in the second quarter, the statistics office said, adding that detailed GDP figures will be published on September 2. “The Statistics Office didn’t mention the performance of investment, but the deepening slump in construction output last month suggests that fixed investment was the main drag on growth in the second quarter,” the analysts added.

The Q2 figure is not expected to have much impact on the central bank’s monetary policy, though, it may make it less dovish. “The Q2 growth figure was, after all, significantly above the bank’s forecast of 2.1% y/y. It doesn’t, however, change our view that monetary policy will remain extremely loose well into next year,” Capital Economics said.

Analysts at Erste see this year’s growth weakening to 2.2% from 4.6% in 2015.

Related Articles

Turkish lira’s chronic weakness credit negative for Turkey’s sovereign rating says Moody’s

The chronic weakness of the Turkish lira (TRY) is credit negative for Turkey’s sovereign debt rating and poses ... more

S&P raises Poland’s outlook to positive on rosy prospects of economy in 2018

Standard and Poor’s raised its outlook for Poland from stable to positive on April 13, while maintaining the country’s rating at BBB+.  The raising of the outlook is based on ... more

Iran 'readying move to switch all foreign transactions from dollars to euros'

Central Bank of Iran (CBI) governor Valiollah Seif has said the cabinet is planning to push ahead with proposals to replace the dollar with the euro for all transactions conducted with foreign ... more