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

Poroshenko officially nominates Smolii for post of Ukraine central bank governor

Ukrainian President Petro Poroshenko has nominated Yakiv Smolii, the acting head of National Bank of Ukraine (NBU), as a candidate for the post of governor to replace the outgoing governor ... more

Moody’s raises Mongolia’s long-term issuer and senior unsecured ratings to ‘B3’ with stable outlooks

Moody's Investors Service on January 18 raised Mongolia's long-term issuer ratings and senior unsecured ratings from Caa1 to B3 with stable outlooks. The ... more

Azerbaijan's IBA sees assets fall 29% y/y in 2017 after debt restructuring

The assets of the International Bank of Azerbaijan (IBA), the largest lender in the country, contracted by 28.9% y/y to AZN8.7bn ($5.1bn) in 2017, the state-controlled bank reported on January 10. ... ... more